CHINA UPDATE

JULY 20151 ACTION PLAN FOR WATER

POLLUTION PREVENTION

2 CLASSIFICATION MANAGEMENT CATALOGUE OF ENVIRONMENTAL IMPACT ASSESSMENT FOR CONSTRUCTION

3 MANAGEMENT RULES FOR OCCUPATIONAL HEALTH MEDICAL CHECK-UPS

4 MANAGEMENT GUIDELINES FOR CITY & TOWN WASTEWATER SEWER DISCHARGE PERMITS

5 CODE FOR FIRE PROTECTION DESIGN OF BUILDINGS (GB50016-2014)

6 TECHNICAL GUIDELINES FOR ECOLOGICAL ENVIRONMENTAL STATUS ASSESSMENTS (HJ 192-2015)

7 TIANJIN CITY AIR POLLUTION PREVENTION ACT

8 JIANGSU PROVINCIAL AIR POLLUTION PREVENTION & CONTROL ACT

9 GUANGDONG PROVINCIAL ENVIRONMENTAL PROTECTION ACT

10 ANHUI PROVINCIAL MEASURES FOR THE INVESTIGATION & REMEDIATION OF POTENTIAL WORKPLACE HAZARDS

ACTION PLAN FOR WATER POLLUTION PREVENTION Promulgated April 2, 2015

The Action Plan for Water Pollution Prevention stipulates comprehensive control of pollutant discharges and remediation of specific items for 10 focal industries that are considered major polluters.

The affected industries include papermaking, coking, nitrogen fertilizer manufacturing, non-ferrous metal processing, dyeing, agricultural and by-product processing, pharmaceutical raw materials manufacturing, tanning, agrochemical and electroplating. Regarding major pollutants such as chemical oxygen demand (COD) and ammonia-nitrogen, newly built, renovated or expanded facilities used for these operations must achieve emissions rates equivalent to—or lower than—the acceptable rates used by most other industries.

For small-scale industrial operations with low levels of comprehensive pollutant monitoring and inadequate environmental protection facilities,

compliance with the Water Pollution Prevention Law and associated regulations is required before the end of 2016. Small-scale projects in the papermaking, tanning, printing, dyeing, coking, smelting, arsenic refining, oil refining, electroplating and agrochemical sectors, which are considered serious water polluters, will be completely prohibited if they do not comply with state production policies.

Additionally, the following updates for cleaner production practices are expected to be completed by the end of 2017.

• Papermaking operations should switchto using elemental chlorine bleach-freepulp, or implement other low-pollutionpulp-making technologies.

• Printing operations should implementlow-discharge dyeing and finishingtechniques.

• Iron and steel coking furnacesshould be converted to use cokedry-quenching technology.

• For urea production operations for nitrogen fertilizer, there should be a shift to cooling water hydrolysis and desorption.

• The pharmaceutical industry(antibiotics, vitamins) shouldimplement green enzymaticproduction techniques.

• Tanning operations should shiftto low-chromium and closed-looptechnologies.

Note: The regulatory information contained herein is current as of July 2015. The next issue of China Update will be published in September 2015.

Continued on page 2

The action plan emphasizes centralized management of water pollution in dense industrial zones, and addresses wastewater management from economic and technological development zones, including machinery industries, as well as high-tech zones (IT, communication and electronics), export processing zones and similar areas with industrial activity concentrations. Industrial wastewater from within such zones must be pre-processed to meet the requirements of centralized processing before entering centralized wastewater treatment facilities.

Prior to the end of 2017, dense industrial zones must construct centralized wastewater treatment facilities per relevant regulations, and install automated online monitoring equipment. This work should be completed by the end of 2016 in the Beijing-Tianjin-Hebei area, and the Yangtze River and Pearl River delta regions. If the work is not completed within the stipulated timeframe, review and approval will be temporarily suspended for new projects that involve increased water pollution discharge levels. The industrial zone qualification will also be revoked, per relevant regulations.

ACTION PLAN FOR WATER POLLUTION PREVENTION Continued from page 1

Effective June 1, 2015

Environmentally sensitive areas in the new catalogue include naturally and culturally protected sites, as well as areas particularly sensitive to various pollutants or ecological factors from construction projects. Areas include:

• Natural protection zones, World Cultural and Natural Heritage sites, and scenic and protected areas that serve as drinking water sources.

• Protected farmland, grasslands and forest parks; major wetlands; natural forests; areas of concentration or distribution of rare and endangered animal and plant species; major aquatic animal spawning grounds; feeding grounds; overwintering areas and flowback channels; natural fish grounds; areas lacking water resources;

CLASSIFICATION MANAGEMENT CATALOGUE OF ENVIRONMENTAL IMPACT ASSESSMENT FOR CONSTRUCTION

focus areas for prevention of erosion by water; protected areas of desertified land for which entry is prohibited; closed and semi-closed coastal areas; and eutrophic water areas.

• Areas with primary residential, medical, sanitation, cultural, educational, scientific, research, administrative and office functions, and protected areas with historic, cultural, scientific or ethnic significance.

The new catalogue stipulates that the nature and degree of environmental sensitivity at a construction project site is the primary basis for determining the category of environmental impact. Projects that are multi-industry or compound in nature will be assigned an environmental impact category that corresponds to the highest component.

MANAGEMENT RULES FOR OCCUPATIONAL HEALTH MEDICAL CHECK-UPS Effective May 1, 2015

Medical and sanitation organizations will be required to conduct pre-employment, on-job and post-employment medical check-ups for employees who come into contact with occupational disease hazards. Employers must cover all related costs.

According to the rules, the pre-employment medical check-up should evaluate a worker’s health status and identify any barriers to employment. The on-job medical check-up will be used to make timely determinations about damage to employee health. Finally, the post-job medical check-up will evaluate a worker’s health status at the time he/she leaves the job, and determine any liabilities related to his or her health.

These new rules require that occupational health examination organizations uphold workers’ rights to privacy, and keep confidential any personal data. Organizations that discover a suspected occupational disease must submit a timely written report to the employee and employer, as well as the local health authority and work safety administration bureau. The employee and employer must also receive timely notifications addressing any relevant barriers to employment.

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MANAGEMENT GUIDELINES FOR CITY & TOWN WASTEWATER SEWER DISCHARGE PERMITS Effective March 1, 2015

The city and town wastewater discharge permit guidelines apply to pollutant dischargers in the industrial, construction, food and beverage, and medical industries.

Dischargers must abide by discharge type, outlet location and quantity, time limit, pollutants discharged and concentration terms outlined in the sewage discharge permit. Affected parties are prohibited from discharging or dumping highly toxic, flammable or explosive materials, corrosive

wastewater or slag, construction mud, grease, sludge and/or hazardous gases or cooking oil fumes into city or town drainage facilities. Dischargers are also prohibited from dismantling, moving or inappropriately using city or town drainage facilities, or discharging wastewater into these facilities without permission.

Violators will be ordered by the local water bureau responsible for the drainage system to halt the violating action, and assigned a deadline for remediating the problem. For cases in which severe consequences result from these violations, the discharge permit will be suspended and the violator will be fined no less than RMB 50,000, or more than RMB 500,000. The water bureau will also compile a list of particularly significant dischargers; violators from this list will be fined no less than RMB 300,000, or more than RMB 500,000, and the corresponding environmental agency will be notified.

CODE FOR FIRE PROTECTION DESIGN OF BUILDINGS (GB 50016-2014)Effective May 1, 2015

The new version of fire design code GB 50016-2014 went into effect on May 1, 2015. It combines the Fire Protection Design of Buildings (GB 50016-2006) and Fire Prevention Design of Civil Skyscraper Buildings (GB 50045-95, 2005) codes, though differs from both in the following ways.

• Harmonizes the requirements of two sets of regulations, and categorizes residential building types by height

• Improves rescue equipment requirements by adding language to fire rescue equipment and wood-frame construction chapters, and systematizes and codifies fire prevention requirements for wood-framed structures

• Supplements fire prevention requirements for external heat insulation systems

• Adds a chapter on firefighting equipment. Eliminates requirements of firefighting water supply systems and smoke exhaust systems design, as both are covered by corresponding state standards

• Appropriately increases technical requirements on fire prevention technologies for use in high-rise residential structures and skyscrapers over 100 meters tall

• Includes new fire safety requirements for evacuations via rooftop walkways. Also includes additions to personnel density regarding the design of construction materials, furniture and lighting shops, and exhibition halls

• Includes new fire safety requirements for underground warehouses, logistics distribution structures, large-scale flammable gas tanks (specific to farms), and liquid ammonia and liquefied petroleum gas (LPG) storage canisters. Adjusts distance requirements for fire safety in liquid oxygen canister storage

• Includes related requirements to prevent horizontal or vertical spread of fire during an incident

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TECHNICAL GUIDELINES FOR ECOLOGICAL ENVIRONMENTAL STATUS ASSESSMENTS (HJ 192-2015) Effective March 13, 2015

These guidelines establish the assessment index system and calculation methods for ecological environmental status assessments. They apply to county, provincial, ecological status and trend-zone assessments, including ecological, functional and natural protected zones, as well as municipalities and city complexes. The original guidelines were established in 2006, and this is the first revision.

The revised content includes:

• Improvements to the assessment index system for ecological environmental status and index calculation methods

• Specialized assessment indices and calculation methods for use in ecological functional zones, municipality and city complexes and natural protected zones

TIANJIN CITY AIR POLLUTION PREVENTION ACTEffective March 1, 2015

The Tianjin City Air Pollution Prevention Act provides specific guidance for joint air pollution prevention efforts by the Tianjin City People’s Government, dischargers and the public; clarifies government responsibility; and expands on planning standards. Article 11 stipulates that the city government may set local standards for items not regulated by state atmospheric environmental quality

standards and pollution emissions. For items covered by an existing state standard, the city can set a local standard more stringent than the state version.

The act establishes the responsibilities of companies for control of both pollutant concentrations and total mass. Article 12 states that Tianjin is implementing atmospheric pollutant discharge concentration control and focal atmospheric pollutant discharge total mass control systems. For atmospheric emissions, pollutant concentrations cannot exceed those set in the emissions standard; for focal air pollutant emissions, the emissions total mass control standard cannot be exceeded.

The major sources of air pollution in Tianjin include fugitive dust, coal burning operations, motor vehicle exhaust and industrial emissions. Article 13 states that the city’s Development and Reform Department will coordinate with other relevant departments to rigorously implement related state regulations on industrial restructuring and entry requirements, and prohibit new construction and expansion of highly polluting industrial projects. The Department of Industry and Information Technology will coordinate with relevant departments to strictly administer the relevant state regulations regarding the removal of outdated products, industrial techniques and equipment.

The act also upholds the strict responsibility of companies to control source pollution. Articles 17 through 21 and 23, address specific regulations for enhancing source control. For instance, pollution generation industries are required to establish and implement comprehensive management responsibility systems for atmospheric pollution prevention and pollution discharge. The project manager must also rigorously implement monitoring responsibilities, and make monitoring data public accordingly.

Articles 24 through 28 guarantee the rights of the public to obtain information, and participate in and supervise air pollution prevention and control activities. Twenty articles—or more than 20 percent of the act—address legal liability, using legal, economic, administrative and public opinion strategies to address violating behavior. Daily penalties accrue without a ceiling, so that even cash-rich companies will be held responsible for their violations.

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JIANGSU PROVINCIAL AIR POLLUTION PREVENTION & CONTROL ACTEffective March 1, 2015

The Jiangsu Provincial Air Pollution Prevention and Control Act includes a separate section on air pollution prevention and control from energy consumption, in which six articles provide regulations for:

• Controlling the total mass of coal burned

• Gradually implementing a reduction in coal burning

• Prohibiting the equipment of new construction with coal-burning power plants

• Prohibiting the import, sale and burning of coal that does not meet coal quality standards

• Providing heat to companies within an industrial park (or industrial grouping zone) and municipal areas

• Gradually enlarging zones in which the use of highly polluting fuel is prohibited

• Prohibiting the use of coal-burning boilers in new construction within municipal areas, with the exception of heat and power cogeneration boilers

The industrial air pollution section of the act includes nine articles that address the provincial government’s responsibility to regularly set or revise

prohibition lists of new construction or expansion projects for highly polluting industries, and identify associated industrial processes and equipment to be phased out. The government must communicate this information to the public, and implement differential water, electricity and air pricing policies for any companies that exceed energy consumption set limits, or emit focal atmospheric pollutants over the required standards.

The act establishes potential fines of up to RMB 1 million against companies that discharge air pollutants in excess of standards; in the case of companies ordered to correct situations and that refuse to do so, administrative authorities may apply a daily fine for as many days as the violation continues, beginning retroactively on the date the order was issued.

The act also provides air pollution control regulations for pollution caused by cooking oil fumes, open-air

barbecues, straw burning and fireworks. Motor vehicle licensing restrictions will require 30 days advance public announcement. On days with serious haze, schools will prohibit all outdoor physical education activities. Outdoor barbecuing in parks is subject to a maximum fine of RMB 2,000. In addition, the government may—based on actual prevailing conditions in its administrative district—limit or prohibit the use of fireworks in terms of time, location or type.

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GUANGDONG PROVINCIAL ENVIRONMENTAL PROTECTION ACTEffective July 1, 2015

Article 19 of the revised act establishes an environmental resource case jurisdiction system appropriately separated from the administrative districts, and sets up a mechanism for the review and adjudication of cases involving environmental resources that cross administrative lines.

The act significantly increases administrative penalties for environmental law and regulation

violations, and describes six scenarios in which daily fines accrue with no upper limit to the number of sanctions. These six scenarios include operators who illegally discharge pollutants and dismantle or remove pollution prevention facilities without approval, and construction companies that fail to submit required environmental impact assessment documents or begin construction without prior approval.

If an organization refuses to comply with government orders to cease illegal actions or perform remediation within a determined period of time, administrative authorities may apply a daily fine for as many days as the violation continues, beginning retroactively on the date the order was issued.

ANHUI PROVINCIAL MEASURES FOR THE INVESTIGATION & REMEDIATION OF POTENTIAL WORKPLACE HAZARDS Effective May 1, 2015

The Anhui Provincial Measures for the Investigation and Remediation of Potential Workplace Hazards define the responsibility of producers and business operators, county, village and higher-level People’s Governments, district offices, development zone management organizations and other government organizations for the inspection and control of potential workplace hazards. The measures also stipulate the content, manner and disposition of accident

and potential hazard inspections for producers and business operators.

Companies may conduct their own potential hazard investigations, or enlist a specialized workplace safety organization or management service to oversee the investigation. The measures establish methods and procedures for companies to remediate potential hazards. They also distinguish between ordinary and major hazards, and provide regulations governing each type. Additionally, the measures codify the behavior of relevant government departments during potential hazard remediation.

The measures require that major potential hazards are tracked and supervised through a supervision system, and stipulate the responsibilities of associated production and operation units for correcting duties, measures, time limits and lead departments, and communicating information to the public. When necessary, matters must be reported to the People’s Government for supervision.

Additionally, the measures establish sanctions for failure to remediate potential hazards. If efforts are not made to remediate a potential hazard, the organization or department responsible for supervision and management of workplace safety must add the incident and names of producers and business operators to the database of violations, per the relevant regulation, and communicate that information to the public. The responsible organization must also submit a report to the industry, investment and state land resource management departments, the Securities Regulatory Commission and relevant financial organizations.

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