Environment Relief Fund (Amendment) Scheme, 2024 Notified

On December 17, the Central government announced amendments to the Environment Relief Fund Scheme, 2008, through the Environment Relief Fund (Amendment) Scheme, 2024. The draft regulations were introduced in July 2024, inviting suggestions and objections from stakeholders. After consultation, the scheme came into enforcement on December 17.

These amendments introduce several key changes to the management and utilization of the fund.

First, the administration of the Environment Relief Fund (ERF) scheme will be transferred from United India Insurance Company Limited (UIICL) to the Central Pollution Control Board (CPCB) for a period of five years starting January 1.

This shift aims to address long-standing issues, including the underutilisation of the fund and significant delays in disbursing compensation to victims of industrial accidents involving hazardous substances. As of March 31, 2023, the ERF possessed about Rs 1,062 crore, according to data from the MoEFCC. However, since 2019, the fund has not disbursed any funds.

Second, the Centre plans to increase the annual service fee paid to the Relief Fund Manager from 1% to 2%.

According to the research report ‘The Management of Environment Relief Fund’ published in 2020 by Vidhi Centre for Legal Policy, there is neither a comprehensive record of accidents involving hazardous chemicals in industries nor an assessment of the damage such accidents may have caused to life or property. Hence, the Fund Manager (CPCB) is required to develop and maintain an online portal for implementing the scheme. The Fund Manager will disburse funds based on orders issued by the District Collector or the Central Government.

To guarantee liquidity for on-time payouts, the money will be invested in savings accounts and state financial institutions (as specified by the Companies Act, 2013). Both interest earned and the full maturity value of fixed deposits will be reinvested on a quarterly basis. The Central Government will receive yearly financial disclosures from the Fund Manager. When a collector orders payment from the fund, they will forward the order (Form II) to the fund manager, who will release the funds within 30 days, subject to availability.

The procedure for applying the fund for environmental restoration is described in a new paragraph 7A. Funds allotted under Rule 3A of the Public Liability Insurance Rules, 1991, will be designated by the fund manager. For approval by the Central Government, the CPCB/SPCBs will draft restoration plans that include cost estimates. The Central Government will provide payment to the CPCB/SPCBs after approval. As a mandate, the fund’s accounts need to be audited by an independent auditor appointed by the Central Government from a panel approved by the Comptroller and Auditor-General.

At the heart of it, these amendments seek to improve the management, transparency, and utilization of the ERF, ensuring its effective use in providing relief and restoring environmental damage caused by industrial accidents.