Company Law

Public Trust Doctrine and the Protection and Promotion of the Environment

1. Meaning of the Public Trust Doctrine

The Public Trust Doctrine (PTD) is a legal principle which holds that certain natural resources — such as air, water, rivers, lakes, forests, sea, seashores, and wildlife — are not the private property of any individual or even of the government in its own right. Instead, the State holds these resources in trust for the benefit of the general public, including present and future generations. The State is therefore only a trustee, and the public is the beneficiary. As a trustee, the State has a fiduciary duty to protect, preserve and manage these resources for public use and cannot transfer, sell or destroy them in a manner that harms public interest.

The doctrine has its roots in Roman law (res communes — things common to all) and was developed in English common law, most famously in Illinois Central Railroad Co. v. Illinois (1892), where the US Supreme Court held that the State cannot abdicate its control over lands underlying navigable waters. In India, the Supreme Court in M.C. Mehta v. Kamal Nath (1997) applied the doctrine and held that the State is the trustee of all natural resources and must protect them against private exploitation. In Nepal, the doctrine is reflected in constitutional, statutory and judicial practice, though not always by that name.

2. Legal Basis in Nepal

• Constitution of Nepal, 2072 (2015), Article 30: guarantees the right to a clean and healthy environment and the right to compensation for environmental damage.
• Article 51(g) (Directive Principles): directs the State to protect and promote the environment, and to ensure sustainable use of natural resources.
• Environment Protection Act, 2076 (2019) and Environment Protection Rules, 2077 (2020): impose duties on the State and project proponents to prevent pollution and conduct environmental impact assessment (EIA).
• Forest Act, 2076, National Parks and Wildlife Conservation Act, 2029, Water Resources Act, 2049, Land Act, 2021 and Local Government Operation Act, 2074: vest ownership and regulatory control of forests, water, wildlife and land in the State as trustee for the people.
• Judicial recognition: Nepali courts have increasingly accepted the idea that the State cannot allow private parties to destroy public natural resources. Cases such as Surya Prasad Sharma Dhungel v. Godavari Marble Industries Pvt. Ltd. (NKP 2050) and various river-pollution and road-widening tree-felling cases reflect the spirit of PTD.

3. Role of the Public Trust Doctrine in Environmental Protection

(a) Restrains arbitrary State action: Since the State is only a trustee, it cannot lease, sell or hand over public natural resources (rivers, forests, lakes, public land) to private persons in a way that defeats public interest. Any such transfer is subject to judicial review.

(b) Protects resources from private exploitation: PTD prevents individuals or companies from monopolising or degrading resources such as riverbeds, sand, stone, forests and water bodies for profit. It supports the cancellation of illegal leases and licences.

(c) Expands the standing of citizens: Any member of the public, as a beneficiary of the trust, can approach the court (including through PIL) to enforce the State's trustee duty, even without showing personal injury. This democratises environmental litigation.

(d) Complements the polluter pays and precautionary principles: PTD supports the idea that the State must act to prevent harm even when scientific certainty is lacking, and that those who damage public resources must bear the cost of restoration.

(e) Ensures intergenerational equity: The trust is held for present and future generations. Hence, the State must adopt sustainable development, not short-term profit maximisation.

(f) Basis for State ownership and regulation: It justifies laws vesting forests, water and wildlife in the State and requiring EIA, permits and conservation measures.

4. Importance in Promotion of the Environment

1. Constitutional and policy support: It gives constitutional legitimacy to environmental rights and directive principles, helping courts read the right to a clean environment as a fundamental right.
2. Public participation and awareness: By treating citizens as beneficiaries, it encourages public participation in decision-making, environmental awareness and community-based conservation.
3. Sustainable resource management: It promotes planned use of water, forest and land resources so that development does not destroy the resource base.
4. Accountability of the State: It makes the government answerable for failure to protect rivers, lakes, forests and public land, and for granting environmentally harmful permits.
5. Conservation of biodiversity: It supports protection of national parks, wildlife reserves, wetlands and biodiversity-rich areas as public trust assets.
6. Foundation for climate and disaster resilience: By insisting on protection of natural ecosystems, it indirectly promotes climate adaptation and disaster risk reduction.

5. Limitations and Challenges in Nepal

• The doctrine is not expressly codified; it is applied mainly through judicial interpretation.
• Weak enforcement, political interference, corruption and inadequate resources weaken the trustee role of the State.
• Conflicting laws and unclear ownership of some resources create confusion.
• Lack of awareness among the public and limited access to justice for marginalized groups.
• Pressure for rapid infrastructure and extractive development often overrides trust obligations.

6. Conclusion

The Public Trust Doctrine is a powerful legal and philosophical tool for environmental protection. It converts the State from an absolute owner into a trustee and the people into beneficiaries, thereby imposing a permanent duty of conservation and sustainable management on the government. In Nepal, though not expressly enacted, the doctrine is visible in constitutional guarantees, environmental statutes and progressive judicial decisions. For its full effectiveness, Nepal should codify the doctrine, strengthen enforcement institutions, ensure public participation and make environmental justice accessible to all. Only then can PTD truly serve as a shield for the environment and a guarantee of the right to a clean and healthy environment for present and future generations.

Implementation Status of International Environmental Law Standards in Nepal

Nepal has ratified or acceded to most major international environmental instruments and has progressively internalised them through constitutional, legislative, judicial and institutional measures. However, a gap persists between formal commitment and effective enforcement. The position may be assessed under four heads: the legal framework, the implementing institutions, judicial treatment, and the practical constraints.

1. International instruments accepted by Nepal

Nepal is a party to, among others:

• Convention on Biological Diversity (1992) — ratified 1993
• United Nations Framework Convention on Climate Change (1992) — ratified 1994, and the Paris Agreement (2015)
• Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES, 1973) — acceded 1975
• Ramsar Convention on Wetlands (1971) — acceded 1988
• Basel Convention on Transboundary Movement of Hazardous Wastes (1989) — acceded 1996
• Montreal Protocol on Substances that Deplete the Ozone Layer (1987)
• Convention to Combat Desertification (1994)
• Stockholm Convention on Persistent Organic Pollutants (2001) — ratified 2007
• Rotterdam Convention on Prior Informed Consent (1998)
• Minamata Convention on Mercury (2013) — ratified 2018

2. Domestic implementation

Constitutional foundation. Article 30 of the Constitution of Nepal, 2072 guarantees the right to a clean and healthy environment. Article 51(g) makes environmental protection a directive principle of state policy, obliging the State to protect the environment and natural resources and to ensure sustainable use.

Legislation. The Environment Protection Act, 2076 and Environment Protection Rules, 2077 provide for environmental impact assessment (EIA), initial environmental examination (IEE), pollution control standards, and penalties. Supporting statutes include the National Parks and Wildlife Conservation Act, 2029; Forest Act, 2076; Water Resources Act, 2049; Aquatic Animals Protection Act, 2037; Plant Protection Act, 2064; and the Local Government Operation Act, 2074, which assigns environmental functions to local levels.

Institutions. The Ministry of Forests and Environment is the focal point; the Department of Environment administers EIA approvals; the National Trust for Nature Conservation, national parks and conservation areas, and the Climate Change Council give effect to biodiversity and climate commitments. Nepal has also prepared National Adaptation Programmes of Action, Local Adaptation Plans of Action and Nationally Determined Contributions under the Paris Agreement.

3. Case law

The Supreme Court of Nepal has been the strongest driver of implementation, using public interest litigation and the constitutional right to a clean environment.

• S. P. Sharma v. Prime Minister (2052 BS / 1995) — the leading environmental case. The Court quashed the lease of land in the Bansbari area for a leather shoe factory, held that the right to a clean and healthy environment is part of the right to life under Article 12(1) of the 2047 Constitution (now Article 30), and directed the government to enact environmental legislation. This decision directly catalysed the Environment Protection Act, 2053.

• Prakash Mani Sharma v. Council of Ministers (2066 BS / 2009) — concerning solid waste management in the Kathmandu Valley; the Court issued directives on waste disposal and environmental protection.

• Kalyan Bahadur Maharjan v. Nepal Government (2064 BS / 2007) — on air pollution in the Kathmandu Valley; the Court ordered the government to control vehicular emissions and enforce ambient air quality standards.

• Gopal Siwakoti "Chintan" v. Ministry of Water Resources (2054 BS / 1997) — on the Arun III hydroelectric project; the Court emphasised that EIA must be genuine and participatory, not a mere formality, and that public participation is essential in environmental decision-making.

These cases show that courts have treated international standards — precautionary principle, polluter pays principle, sustainable development, and public participation — as interpretive aids and, in several instances, as binding norms to be enforced through writs of mandamus and certiorari. The Supreme Court has also recognised the principle of intergenerational equity and the right of future generations to a healthy environment.

4. Constraints on implementation

1. Weak enforcement machinery — inadequate inspectors, laboratories and monitoring equipment.
2. Political and economic pressure — development projects are often prioritised over environmental safeguards.
3. Limited awareness and access to justice — affected communities, especially in rural areas, lack legal literacy and resources.
4. Inconsistent EIA quality — many reports are prepared by consultants with a conflict of interest.
5. Federalism challenges — unclear division of environmental responsibilities among federal, provincial and local governments.
6. Resource constraints — insufficient budget for conservation, climate adaptation and pollution control.
7. Weak compliance with treaty reporting — Nepal has at times been late in submitting reports to treaty bodies.

5. Conclusion

Nepal's record on formal implementation of international environmental law is strong: the Constitution, the Environment Protection Act, 2076 and a series of Supreme Court decisions have incorporated key international principles. The substantive implementation, however, remains weak because of enforcement deficits, political economy pressures and institutional limitations. The way forward lies in strengthening monitoring capacity, ensuring genuine and independent EIA, clarifying federal environmental competences, and giving full effect to the constitutional right to a clean and healthy environment as elaborated in S. P. Sharma and subsequent cases.

Significance of the Godavari Marble Case in the development of environmental law in Nepal

Surya Prasad Sharma Dhungel v. Godavari Marble Industries Pvt. Ltd. (NKP 2050) is the first major environmental public interest litigation in Nepal. The petitioner, an advocate, challenged the operation of a marble quarry at Godavari, near Kathmandu, on the ground that quarrying, blasting and dust were damaging the environment, public health, the water source and the religious and cultural heritage of the Godavari area, which includes the sacred Phulchoki and Godavari Kunda region.

Why the case matters

1. Public interest litigation and standing. The Court allowed a person with no personal injury to move it for the public good. This opened the door to environmental PIL in Nepal and widened locus standi.
2. Environment as part of the right to life. The case was an early step towards reading the right to a clean and healthy environment into the right to life. That reading is now written into Article 30 of the Constitution of Nepal, 2072.
3. Sustainable development. The Court recognised that industry and development cannot be allowed to destroy the natural environment and the people's health, and that economic activity must be balanced with conservation.
4. Environmental impact assessment. The case stressed the need to assess in advance the effects of a project on the environment. This pushed the State towards formal EIA rules and later legislation.
5. Intergenerational equity and precaution. The reasoning is cited for the duty to protect nature for future generations and to act to prevent harm before it happens.
6. Judicial activism. It showed the Supreme Court's willingness to direct the government and control private enterprise in the public interest, and it prepared the ground for later cases such as S. P. Sharma and for the Environment Protection Act, 2053 (now replaced by the Environment Protection Act, 2076).

Conclusion

The Godavari Marble Case marks the beginning of environmental jurisprudence in Nepal. It established that the courts can protect the environment through PIL, and the principles it supported (sustainable development, EIA, intergenerational equity) now form the basis of Nepali environmental law.

Nepali legal standards on the control and prevention of pollution

Nepal controls pollution through a layered system of constitutional, statutory, technical and judicial standards.

1. Constitutional basis

• Article 30 of the Constitution of Nepal, 2072 guarantees every person the right to live in a clean and healthy environment and the right to compensation for damage caused by pollution or environmental degradation.
• Article 51(g) (policies of the State) directs the State to protect the environment, prevent pollution and promote sustainable use of natural resources.
• Article 46 gives the right to move the Supreme Court by writ for enforcement of fundamental rights, which allows public interest litigation against polluters and against State inaction.

2. Statutory framework

• Environment Protection Act, 2076 and Environment Protection Rules, 2077: no person may pollute beyond the prescribed standards; proposals must undergo IEE or EIA before approval; pollution control certificates, inspection and penalties are provided.
• Solid Waste Management Act, 2068 (and its rules) places on local governments the duty to manage waste.
• Water Resources Act, 2049: prohibits polluting water sources beyond the prescribed standard.
• Motor Vehicles and Transport Management Act, 2049: vehicle emission control.
• Public Health Service Act, 2075, Forest Act, 2076 and National Parks and Wildlife Conservation Act, 2029 deal with sanitation, forest and wildlife protection, and Local Government Operation Act, 2074 gives local governments powers over waste, sanitation and local pollution.

3. Technical standards

The government issues national standards for ambient air quality, drinking water quality, noise levels, vehicle and industrial emissions and effluent discharge. Industries must keep within these limits.

4. Institutions

The Ministry of Forests and Environment, the Department of Environment, the Environment Protection Council and local governments set, monitor and enforce the standards, with courts providing review.

5. Principles and remedies

The polluter-pays and precautionary principles are applied. Remedies include fines, closure, cancellation of licences or approvals, orders to restore damage, compensation to victims, and writs from the Supreme Court in public interest cases.

6. Assessment

The legal standards are fairly complete and match international norms, but enforcement is weak because of limited monitoring capacity, resources and political will, particularly in Kathmandu Valley air pollution and in urban solid waste.

a. Principle of Environmental Assessment

Environmental assessment (EA) is the process of identifying, predicting and evaluating the environmental effects of a proposed project or activity before it is approved. Its main principles are:

1. Prior assessment — the impact must be studied before the activity begins, not after harm is done.
2. Public participation — affected persons and stakeholders must be informed and consulted.
3. Transparency and access to information — the report and its findings should be open to scrutiny.
4. Precautionary approach — where serious damage is possible, lack of full scientific certainty is no excuse for inaction.
5. Prevention over cure — EA aims to avoid harm rather than compensate it later.
6. Monitoring and compliance — approval conditions must be enforced through follow-up monitoring.
7. Integration — environmental concerns must be built into development planning and decision-making.

In Nepal, EA and Initial Environmental Examination (IEE) are required under the Environment Protection Act, 2076 and its Rules, 2077, and are a condition for approving most development projects.

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b. Polluter Pays Principle

The polluter pays principle (PPP) means that the person or enterprise causing pollution must bear the cost of preventing it, controlling it and remedying the damage it causes. The cost of pollution is thus treated as a cost of production and is "internalised" by the polluter rather than being pushed onto society.

Key features:

1. The polluter is liable for prevention, control and clean-up costs.
2. Liability may be strict — fault or intention need not be proved.
3. It may extend to compensation to victims and restoration of the damaged environment.
4. It is applied through pollution fees, fines, deposits, taxes and cost-recovery orders.

The principle was recognised in the Rio Declaration, 1992 (Principle 16) and is reflected in Nepal's Environment Protection Act, 2076, which empowers authorities to order a polluter to compensate for damage and to bear clean-up costs. It supports both corrective justice and deterrence.

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c. Environmental Protection Standards in the Muluki Civil Code, 2074

The Muluki Civil Code, 2074 (National Civil Code) contains several provisions that indirectly protect the environment through the law of property, nuisance and neighbour relations:

1. Section 703 (Rights of neighbours) — a person may not use his land in a way that causes excessive smoke, dust, bad smell, noise, vibration or water pollution injuring a neighbour's health or property.
2. Section 704 — restrictions on constructing structures that block light, air or water flow, or that damage a neighbour's land.
3. Section 705 — liability for damage caused by the escape of harmful substances, polluted water or noxious matter from one's premises.
4. Sections 706–707 — duty to maintain one's building and land so that it does not endanger others, and liability for damage to trees, crops and water sources.
5. Section 708 — compensation for harm caused by an act or omission, including harm to health and property from pollution.
6. Public nuisance and easement provisions — rights relating to water, air and passage are regulated so that natural resources are not wrongfully diverted or fouled.

Thus, though the Civil Code is not an environmental statute, it provides a civil remedy (damages, injunction) against pollution and unreasonable use of land, supplementing the Environment Protection Act, 2076.

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e. Pulp Mills Case, 2010

Pulp Mills on the River Uruguay (Argentina v. Uruguay), decided by the International Court of Justice in 2010, is a leading case on transboundary environmental harm.

Facts: Uruguay authorised the construction of two pulp mills on the River Uruguay, a shared boundary river. Argentina claimed that Uruguay breached the 1975 Statute of the River Uruguay by not notifying and consulting it, and that the mills would pollute the river.

Held:

1. Uruguay breached its procedural obligations of notification and consultation under the 1975 Statute.
2. Uruguay did not breach substantive obligations, as Argentina failed to prove actual significant pollution at the time.
3. The Court affirmed that a prior environmental impact assessment is required by general international law where a project may cause significant transboundary harm, and that the assessment must be carried out before the activity begins.
4. The State must exercise due diligence and keep the impact assessment updated, and must monitor the project's effects.
5. The Court laid down that the EIA must cover the cumulative and transboundary effects, not merely local ones.

Significance: The case firmly established the duty to conduct a transboundary EIA, the content of due diligence, and the obligation of continuous monitoring — principles now central to international environmental law.