(i)

The effect of the administrative disposition will only be succeeded for a period of one year, following the expiration of the original disposition period;

(ii)

The effect of the administrative disposition will be limited if it is established that the Transferee is a bona fide transferee;

(iii)

The Transferee is responsible for confirming the history of administrative dispositions with the Transferor in advance; and

(iv)

When requested by the Transferee, the Minister of Environment may issue an official document detailing the history of administrative dispositions.
 

1.

Limitation on the Succession of Administrative Dispositions: One Year

Previously, the Environmental Crimes Control Act transferred administrative dispositions to the Transferee of an illegal emission facility, without any particular restriction. The Amended Environmental Crimes Control Act now limits this succession to one year from the expiration of the original disposition period. It also clarifies that ongoing administrative disposition procedures at the time of transfer can continue against the Transferee.

This amendment aligns with similar provisions in other legislation (see, e.g., 17 laws including the Public Health Control Act and the Livestock Products Sanitary Control Act, as noted in a May 2023 report by the Anti-Corruption and Civil Rights Commission). The rationale is to provide a reasonable time limit for the impact of administrative dispositions and to establish a clear legal basis for continuing ongoing administrative procedures against the Transferee who acquires an illegal emission facility.

It is important to note that administrative dispositions under Article 13 of the Environmental Crimes Control Act (orders to suspend operation, dismantle, or close a facility) currently lacks specific standards for aggravated penalties in cases of repeat offenses. Consequently, even with the one-year limitation on the succession of administrative disposition, the practical impact on the Transferee might not be substantial.
 

2.

Protection of Bona Fide Transferees

The Amended Environmental Crimes Control Act introduces a new safeguard for bona fide Transferees (excluding those who inherit the facility) who were unaware of any prior administrative dispositions imposed against the Transferor. Specifically, if the Transferee can establish that it was not aware of the facility’s illegal status (the violation) or any history of administrative dispositions at the time of acquisition, it will be protected from the succession of administrative procedures or the effects of past dispositions.

This provision mirrors similar protections afforded for innocent transferees found in other legislation (see, e.g., 45 laws including the Public Health Control Act and the Livestock Products Sanitary Control Act, as noted in a May 2023 report by the Anti-Corruption and Civil Rights Commission) with the aim to shield bona fide parties involved in the transfer of illegal emission facilities.

Crucially, this succession rule applies specifically to the transfer of the illegal emission facility itself, and it does not extend to situations where someone acquires shares in a company that owns such a facility (i.e., a share transfer rather than a direct asset or business transfer).
 

3.

Transferee’s Obligation to Verify Prior Administrative Dispositions of Emission Facility

The Amended Environmental Crimes Control Act imposes a new obligation on Transferees: they must proactively verify any ongoing administrative disposition procedures or the history of past administrative dispositions imposed against the Transferor before acquiring the emission facility.

It is modeled after similar due diligence requirements in other laws (such as the Popular Culture and Arts Industry Development Act and the Child Care Act) concerning asset or business transfers. By requiring the Transferee to actively inquire about any administrative history or ongoing procedures, we understand that the law allows the Transferee to demonstrate bona fide acquisition for any issues not disclosed by the Transferor.

While legal due diligence is common practice in asset and business transfers between companies to uncover legal violations and administrative dispositions related to emission facilities, the Amended Environmental Crimes Control Act now explicitly codifies this practice as the Transferee’s responsibility. Consequently, Transferees will need to conduct a more thorough verification process in the future, going beyond passively relying on the information provided by the Transferor. This will likely involve actively utilizing procedures for obtaining official documentation, as outlined in Section 4 below.
 

4.

Official Documentation of Administrative Disposition History by the Minister of Environment

The Amended Environmental Crimes Control Act also introduces a new provision enabling the Minister of Environment to issue official documents detailing the administrative disposition procedures and history associated with the Transferor, upon the Transferee’s request. The Proposed Amendment provides templates for both the “Application for Confirmation of Administrative Disposition” (to be submitted by the Transferee to the Minister of Environment) and the “Confirmation of Administrative Disposition” (to be issued by the Minister of Environment).

The proposed “Application for Confirmation of Administrative Disposition” form requires the Transferor’s consent for the inquiry (to be provided via a separate “Consent to Confirmation of Administrative Disposition”). The “Confirmation of Administrative Disposition,” issued by the Minister of Environment or relevant local authorities (e.g., mayor or governor, or the head of a regional environmental agency), will include essential details such as the specifics, legal basis, and violations related to the administrative action.

Once the Proposed Amendment is finalized and implemented, Transferees of emission facilities can request a confirmation of administrative disposition from the Minister of Environment by attaching the Transferor’s consent, and the Minister of Environment is then expected to issue the confirmation after verifying that the request was made lawfully. While it would be difficult to obtain the confirmation if the Transferor does not consent, even in such cases, it could serve as a basis for proving the bona fide Transferee regarding illegal emission facilities. From the Transferor’s standpoint, as it would be also difficult to refuse such a consent request from a prospective Transferee for a successful transaction, this system could be actively utilized in future transactions involving the transfer of emission facilities.