Supreme Court Asks Vedanta How Could It Operate Tuticorin Copper Plant Despite Expiry Of Its Hazardous Waste Authorisation

On Wednesday and Thursday, a bench of Chief Justice DY Chandrachud and Justices JB Pardiwala and Manoj Misra heard a special leave petition filed by Vedanta Limited against an August 2020 Madras High Court ruling dismissing a batch of pleas by the company against the closure of its copper plant in Tuticorin and other consequential orders passed by the Tamil Nadu Pollution Control Board (TNPCB).

On the last occasion, the apex court mulled over the idea of forming this expert committee, emphasising the need for an objective evaluation that considers both the investment interests of Vedanta and the welfare of the public in the region. Outlining the potential benefits of such a committee, the court urged counsel representing the State of Tamil Nadu, Senior Advocates Gopal Sankaranarayanan and CS Vaidyanathan, to collaborate on a comprehensive modality that best serves public interest.

During the latest sessions, the court reiterated its suggestion. At the outset, the bench categorically affirmed its obligation to protect the health and welfare of the local community in the region which has witnessed sporadic protests since 1999 against Vedanta's factory over allegations of soil, water, and air contamination, as well as a violent confrontation in May 2018 between the police and protesters that claimed 13 lives.

At the same time, a 'way forward', Chief Justice Chandrachud suggested, could be an independent verification on the conditions to be imposed now on the mining company to ensure compliance with environmental norms and additional safeguards. To Senior Advocate Shyam Divan appearing for Vedanta Limited, the chief justice said –

“We cannot give you permission today to refurbish, but if you can provide an estimate of the costs…We can impose some condition on you of putting money upfront, say in the form of an escrow, as a bona fide demonstration that you will comply with all the environmental conditions which may be prescribed by an expert committee of which Tamil Nadu Pollution Control Board will obviously be a part.”

Agreeing with this suggestion, Divan said that this committee could constitute representatives from the environment ministry, NEERI, the Central Pollution Control Board, the Indian Institute of Technology, TNPCB, Vedanta, along with three independent experts. The senior counsel added –

“To streamline the process, it may be worthwhile appointing a retired Supreme Court judge as the chairperson. This will make it much easier to work this out. The committee could submit its report within a month recommending conditions for the resumption of operations at the copper smelter, including additional safeguards if required. Pending receipt of the report, Vedanta may be permitted to carry out refurbishment, repair, and maintenance of the unit at its own risk and costs.”

The State of Tamil Nadu, however, questioned the necessity for appointing an expert committee when detailed findings had already been rendered by the Madras High Court in an 800-page-long judgment. On the State's behalf, Vaidyanathan emphatically argued that the facility had been closed due to extensive pollution in the surrounding area. Despite recommendations from several committees urging the company to take corrective actions, these measures were not implemented, he alleged.

The hearing will continue on Thursday afternoon, with Sankaranarayanan and other counsel appearing for the respondents set to make their oral submissions. The petitioner-company will also be supplying their arguments in rejoinder.

What has been argued so far?

I. Copper slag dumping

This week, Senior Advocate Shyam Divan, challenged the Tamil Nadu government's decision to reject the renewal of Consent to Operate (CTO) for the copper plant, arguing that the state's action was not only incorrect but also disproportionate.

The state government had cited several grounds for the plant's closure in May 2018, including issues related to groundwater reports, hazardous waste disposal licenses and practices, and ambient air quality reports. One of the reasons for the CTO's non-renewal is Vedanta's purported violation of one of the conditions set out in the previous renewal order by allegedly failing to remove the copper slag dumped or stored along the Uppar river and on patta land. Not only this, the Tamil Nadu State Pollution Control Board also found that the mining company had not erected any physical barrier between the river and the slag landfill area to prevent leaching. Refuting these allegations, Divan argued –

“Copper-slag is non-hazardous. Besides, but it is also a sought-after material for landfilling and levelling as well as for road constructions, cement and concrete manufacturing, etc. Also, the location of the patta land was at a distance of 10-11 kms from the plant. The conditions set out in the consent to operate did not prescribe any time limit within which the physical barrier had to be constructed and the heaped or dumped copper slag had to be removed. If there were further requirements, the company ought to have been allowed to fulfil them, instead of shutting down a whole functional unit.”

The state pollution control board, however, raised significant concerns regarding the disposal of copper slag by Vedanta Limited's copper plant in Tuticorin, arguing that the issue has persisted since its establishment. Despite repeated directives between 2004 and 2012, including an instruction to dispose of slag at a ratio of 1:1.5 (1.5 times the generation each month), Vedanta allegedly neglected to address the existing slag accumulation.

In 2013, the TNPCB uncovered further violations, noting that Vedanta had resorted to indiscriminate dumping of approximately 14 lakh tonnes of copper slag. In a bid to feign compliance, the company had also allegedly dumped copper slag at 11 open sites across Tuticorin district. Among these sites was the river bed of the Uppar river, where 3.52 lakh metric tonnes of slag were deposited across 1.38 hectares. This reckless dumping not only violated environmental regulations but also resulted in severe consequences for the local community, including flooding in the district due to the obstruction of the river valley, Vaidyanathan argued.

II. Gypsum pond construction

Challenging the ground of non-construction of a gypsum pond cited in the closure order, Vedanta Limited highlighted the timeline and efforts towards upgrading the gypsum pond as per the Central Pollution Control Board (CPCB) guidelines. According to the company, the CPCB's guidelines for phosphor-gypsum, issued in October 2014, mandated a geo-membrane liner of 1.5 mm thickness by September 2019. Vedanta argued that they had a 0.5 mm liner in use since 2004, aligning with global best practices at the time. As early as April 2018, steps were initiated to finalise contracts for the pond's upgrade as per the guidelines, the company pointed out.

The TNPCB disagreed, highlighting phosphor-gypsum's potential environmental hazards, including high fluoride concentration, heavy metals, and high acid content, all of which pose risks to groundwater, the food chain, and aquatic life. Phospo-gypsum is a byproduct of Vedanta's phosphoric acid plant, produced to the tune of 3200 tonnes per day. The board revealed that over 4 lakh tonnes was stored in a 16-hectare gypsum pond. It pointed to the presence of a significant amount of phospho-gypsum observed as early as 2004, which has only grown over the years. This accumulation, combined with elevated levels of fluoride and total dissolved solids (TDS) around the pond, raised red flags about Vedanta's waste management practices, the TNPCB argued.

TNPCB also contended that despite Vedanta's claims, it had actually removed over 13 lakh metric tonnes of gypsum after the plant's closure, indicating misrepresentation of waste quantities. In its application for renewal of consent to operate, the mining company had assured that there was no dead stock beyond 15 days in the plant. The amount of gypsum at the unit was declared to be only 4.5 lakh metric tonnes.

III. Hazardous waste authorisation

During this week's hearing, the apex court notably asked the mining company how it could have continued operations despite the expiry of the hazardous waste authorisation under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016.

One of the grounds cited for directing its shutdown was the absence of a valid hazardous waste disposal license. While Vedanta did apply for a renewal of the permission, it continued functioning even after the previous license expired. Defending this lack of a hazardous waste authorisation, Divan contended, “They took a very long time to process the application, not just for Vedanta, but for industries across the state, including neighbouring units. Even where they take the time and the period has expired, they allow the industry to continue functioning.”

The Tamil Nadu Pollution Control Board denied these allegations, claiming that Vedanta's applications had to be rejected or returned multiple times on account of being incomplete.

In response, Chief Justice Chandrachud asked Vedanta's lawyer if there was any provision allowing industrial units to continue operating, pending an application for the renewal of their hazardous waste disposal licenses.

Divan answered in the negative, but argued that it was a common 'understanding' shared by industrial units 'across the board' –

“But that is our understanding. These are huge industries that run 24x7. It's not just Vedanta but across the board. There is no such deemed consent but from any reasonable perspective having regard to the manner in which the law is required to operate…Either they process applications with alacrity, or…We have sent reminders, statutory returns as if Vedanta was holding an extant permission, and even manifests, which are the detailed list of every hazardous substance. Vedanta proceeded on the basis that its application was going to be renewed.”

“Once your hazardous waste authorisation has expired, then there is no question of your continuing in the absence of any renewal. Why did you not approach the court under Article 226?” the chief justice pressed further.

Although Divan conceded that the mining company should have moved the high court for an expeditious disposal of their renewal application, he argued that in view of the massive delay on the part of the authorities to process its request, closing down the plant was a 'disproportionate' reaction.

Chief Justice Chandrachud replied –

“Mr Divan, the difficulty which we will face is this: This shows that there is a failure on the part of the pollution control board and perhaps this is the state of pollution regulation in India. But for the highest court of the land to say that allow entities without authorisation to operate because the board has kept the applications pending will be setting a very wrong precedent.”

IV. Groundwater analysis reports

Divan stressed that there were no allegations of groundwater pollution against the Vedanta-owned copper smelter, pointing out that the practice of groundwater sample collection and analysis by the TNPCB had been ongoing for nearly 21 years by 2018.

Contrarily, the TNPCB argued that they had independently commissioned the collection and testing of groundwater samples for several years, at the cost of the mining company. This, however, was done as an additional measure, not as a substitute for the consent conditions. Highlighting the importance of groundwater quality in determining the suitability of an industrial operation in the area, the board criticised Vedanta's compliance with reporting requirements post the refusal of consent in 2018, labelling it as 'disingenuous'. In particular, the TNPCB pointed to the highly polluted nature of the groundwater around Vedanta's plant, citing elevated levels of total dissolved solids (TDS), chlorides, sulphates, and other pollutants, making it unfit for various uses.

It also underscored that whenever fresh consent is considered, regulatory bodies must be satisfied with the compliance of previous consent conditions. In the absence of such compliance, they argued, it was their duty to refuse consent.

V. Ambient air analysis in respect of arsenic

Another ground for refusal to renew the cooper plant's consent to operate was its alleged failure to furnish ambient air quality analysis for arsenic substances. Rejecting this, Vedanta argued that readings of arsenic levels in ambient air were consistently provided to the TNPCB for over 15 years prior to April 2018. The company further contended that the pollution control board did not previously require readings from an accredited laboratory specifically for arsenic in ambient air. When such information was needed, it was reportedly supplied through accredited labs like NEERI and Vimta. Vedanta argues that the requirement for analysis from an NABL/MoEFCC approved laboratory is not stipulated in the amendment Rules of 2009, which introduced arsenic as an ambient air parameter.

The TNPCB, however, maintained that as per consent conditions, Vedanta was obligated to analyse heavy metal parameters such as arsenic in ambient air using the board's laboratory services. Since the TNPCB did not possess this capability at the relevant time, Vedanta was instructed to engage the services of MoEFCC and CC/NABL accredited laboratories to provide reports to the board. Instead of utilising an accredited lab, Vedanta conducted tests on ambient air through its in-house lab, which only held NABL accreditation for product and raw material quality testing, not for heavy metals in ambient air, the board alleged. All data provided by Vedanta's in-house lab was unreliable and an attempt to misrepresent compliance with consent conditions, it claimed.

VI. Green belt and other issues

Besides this, the state pollution control board flagged a large number of other environmental concerns arising out of the operation of Vedanta's plant, including their non-maintenance of a green belt, not having an appropriately sized stack, copper concentrate being brought from the port to the factory in open lorries, etc. It also argued that despite 'repeated opportunities for remediation', the company had continued with its unsustainable and destructive practices.

It is the largest industry in the industrial complex and it is the only industry with a history of pollution, Vaidyanathan told the court during the hearing, invoking several foundational principles of environmental jurisprudence, including the precautionary principle.

Divan, however, maintained that the copper plant, which has been closed since 2018, has significant implications for India's copper supply and economy. According to the mining company's submissions, the plant met 36 percent of India's copper requirement and contributed significantly to the national exchequer. It directly employed 4000 people and indirectly supported 20000 jobs, impacting over 200000 individuals dependent on downstream industries.

The order directing the permanent shutdown of the factory was gross and disproportionate, the senior counsel argued.

Background

The legal battle surrounding the Sterlite plant has seen multiple phases, with the controversy dating back to Tamil Nadu Pollution Control Board's (TNPCB) April 2018 order directing the shutdown of the copper plant on grounds of procedural irregularities. Initially, Vedanta Limited appealed to the TNPCB Appellate Authority after the renewal of the Consent to Operate (CTO) was rejected. However, as the appeal was underway, the state government in May 2018 directed the permanent closure and sealing of the Tuticorin plant. Aggrieved by this, the mining company approached the National Green Tribunal (NGT), which, after obtaining a fresh report from the technical committee, set aside all the contested orders in December 2018.

The NGT concluded that the grounds for the plant's closure were found to be erroneous and not valid reasons for rejecting the CTO renewal. Upon appeal by the state pollution control board, the Supreme Court overturned the NGT order in February 2019, solely on the grounds of maintainability, as the impugned orders were considered composite in nature. The Supreme Court, however, granted the petitioner the liberty to challenge the orders before the Madras High Court, leading to the filing of ten writ petitions.

In a major setback to the company, the Madras High Court in August 2020 upheld the denial of the CTO renewal, along with the permanent closure of the plant, a decision which the petitioners challenged in the Supreme Court.

Interestingly, during the height of the COVID-19 crisis, the Supreme Court granted Vedanta Limited permission to operate its oxygen production unit on a standalone basis at the copper plant in Tuticorin. The plant had been non-operational for three years before this. This permission was granted in response to the acute shortage of oxygen faced by numerous states across the country during the second wave of the pandemic. It marked a temporary resumption of operations at the copper plant for this specific purpose, despite its ongoing closure due to the regulatory and legal issues surrounding its operation.

Case Details

Vedanta Limited v. State of Tamil Nadu & Ors. | Special Leave Petition (Civil) No. 10159-10168 of 2020