Centre set to transfer management of ERF scheme to CPCB from January 1

The Centre is planning to transfer the administration of the Environment Relief Fund (ERF) scheme from United India Insurance Company Limited (UIICL) to the Central Pollution Control Board (CPCB) starting January 1.

 

According to sources in the Ministry of Environment, Forest, and Climate Change (MoEFCC), the decision is aimed at addressing longstanding issues, including the underutilisation of the fund and significant delays in disbursing compensation to victims of industrial accidents involving hazardous substances.

 

As per MoEFCC data, the ERF held approximately Rs 1,062 crore as of March 31, 2023. However, no disbursements have been made from the fund since 2019. In a written response to Parliament in August 2023, the ministry acknowledged, “No amount has been disbursed as compensation from the Environmental Relief Fund since 2019.”

 

This proposed shift is expected to enhance the efficiency and transparency of fund management, with the CPCB leveraging its environmental expertise to ensure timely relief for affected individuals, a source working with MoEFCC said.

 

The Centre is also planning to increase the annual service fee paid to the Relief Fund Manager from 1 per cent to 2 per cent of the funds added to the corpus, or as determined by the Central Government from time to time. This fee is paid from the money collected in the corpus.

 

Instituted under the Public Liability Act, 1991 (PLIA) in the wake of the Bhopal Gas Tragedy, the ERF’s primary purpose is to offer immediate relief to victims of accidents involving hazardous substances. 

 

The PLIA mandates industries handling hazardous materials to mandatorily obtain public liability insurance. Apart from contributions from hazardous industries that opt for insurance under the PLIA, the ERF consists of compensation awarded by the National Green Tribunal (NGT) for damage to the environment under Section 24 of the NGT Act, 2010.

 

The amount received under the Relief Fund is invested by the fund manager in public financial institutions and savings accounts in such a way that the total relief amount can be made available to the Collector—who is responsible for disbursing the funds to the victims—within fifteen days.

 

When the victim approaches the District Collector, the Collector issues an order for payment from the fund and forwards it to the Fund Manager, who releases the funds within 30 days.

 

However, despite these rules in place, no systematic study of the utilization and effectiveness of the ERF has been conducted so far – not even by the Comptroller and Auditor General of India.

 

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.

 

-  ERF held Rs 1,062 crore as of March 31, 2023, but no disbursements have been made since 2019.

 

-  Along with changing the Fund Manager, the Centre plans to increase the annual service fee paid to the Relief Fund Manager from 1% to 2%.

 

-  The ERF, established under the PLIA 1991, provides immediate relief to victims of hazardous substance accidents.

 

-  The ERF consists of contributions from industries under PLIA and NGT compensation for environmental damage.