Recent amendments to environmental laws and regulations have strengthened penalties for violations. Under the Act on the Control and Aggravated Punishment of Environmental Offenses (APEO) as amended, administrative fines for certain environmental offenses have been increased up to an amount of the clean-up cost plus 5% of the sales. The Water Environment Conservation Act (WECA), the Waste Control Act (WCA) and the Act on the Transboundary Movement of Hazardous Wastes and Their Disposal (ATMHW) have also been amended to substantially enhance administrative fines. Given that these amendments are expected to affect many companies in related industries, it would be advisable to familiarize with these amendments and ensure compliance with their requirements.

1. Administrative Fines as Penalties under Recent Amendments to Environmental Laws
A. The Act on the Control and Aggravated Punishment of Environmental Offenses (APEO)

Prior to the recent amendment to the APEO, administrative fines under the APEO was imposed only for illegal discharge of certain pollutants. The recent amendment to the APEO which was implemented on Nov 27, 2020 has expanded the application of administrative fines to illegal discharge of any specific hazardous substances and illegal discharge or leakage of hazardous substances through manipulation of measuring devices (with respect to specific air or water-hazardous substances) or documents or data (with respect to specific air or water-hazardous substances, designated wastes or toxic substances) or through non-compliance with the approval or report requirements. The amendment to the APEO has also substantially increased the amount of administrative fines up to an amount of the clean-up cost plus 5% of the sales. On the other hand, the amendment to the APEO has also introduced the "environmental leniency system" that allows a partial reduction of administrative fines for those who report and cure a violation as soon as they become aware thereof. The specifics of such partial reduction of administrative fines are set forth in the Enforcement Decree of the APEO as follows:

(a) any person who voluntarily reports to the Ministry of Environment (MOE) and cures any violation of Article 12(1) of APEO as soon as becoming aware of such violation :

Administrative fines will be reduced to 30% or less of the amount regularly charged

(b) any person under paragraph (a) above who actively cooperates in the investigation by consistently admitting the violation and submitting related data until the investigation is complete:

Administrative fines will be reduced to 50% or less of the amount regularly charged

(c) any person under paragraph (a) or paragraph (b) above who is the first to report a joint illegal act to the MOE and submit related data:

Administrative fines will be reduced to 80% or less of the amount regularly charged

B. The Water Environment Conservation Act (WECA)

Under the WECA as amended (which was implemented on Nov 27, 2020), the limit of administrative fines imposed in lieu of business suspension has been increased from KRW 300 million before the amendment to an amount up to 5% of the sales. Such administrative fines may be reduced up to 50% depending on the type and degree of the violation.

C. The Waste Control Act (WCA)

The WCA as amended (which was implemented on May 27, 2020) has introduced “punitive fines” which can be imposed by the MOE or the local government on any person who generated improperly treated waste in an amount equal to or less than three times the profit derived from improper treatment of the waste (i.e., the cost of properly treating the waste which the person did not spend) plus the cost of removing or restoring the waste.

In addition, under the WCA as amended, the limit of administrative fines imposed on waste disposal companies in lieu of business suspension has been increased from KRW 100 million before the amendment to an amount up to 5% of the sales. Such administrative fines may be reduced up to 50% depending on the type and degree of the violation.

D. The Act on the Transboundary Movement of Hazardous Wastes and Their Disposal (ATMHW)

The amended ATHMHW (which was implemented on Oct 1, 2020) has also introduced punitive fines. The ATHMHW as amended authorizes the MOE to impose administrative fines on any person who has exported or imported waste whose import and export are regulated (i) with export or import license falsely obtained or with no such license; (ii) after the revocation of the export or import license; or (iii) falsely reporting or failing to report the export or import of such waste in an amount equal to or less than three times the profit derived from improper treatment of the waste plus the cost of removing or restoring the waste.

2. Prospect

Penalties for a violation of the environmental laws are on the rise. In particular, given that the recent amendments to the environmental laws show a movement toward imposing administrative fines based on sales or profits derived from the violation rather than a specific amount of fines, a violation of the environmental laws may result in a substantial risk in monetary terms beyond business suspension. In addition, the amended APEO does not simply reinforce the amount and application of administrative fines, but also expands the scope of violations subject to penalties. Under the amended APEO, “environmental inspectors” may crack down violations of 45 related laws enforced by MOE (in contrast to 13 before the amendment). Given that the recent amendments to the environmental laws are expected to be applied more broadly and effectively, companies in related industries would need to familiarize themselves with the amendments and ensure compliance therewith.

Yoon & Yang’s Environment Practice Group provides clients with optional solutions to a wide array of environmental issues, drawing upon extensive experience and expertise. Please contact us if you have any questions.