Interpretation of Articles 302 to 304 of the Ecological Environment Code (Mainland China): Legal Liabilities for Urban Wastewater and Sludge Disposal

[Mainland China] Articles 302 to 304 and Article 1172 of the Ecological Environment Code have officially taken effect, imposing mandatory provisions on operators of urban sewage treatment plants and sludge harmless disposal units regarding their obligations to track and record the flow direction, purpose, and quantity of sludge; violators face a maximum fine of 20 万 yuan, and in serious cases, the urban drainage authority shall designate a unit with treatment capacity to conduct remediation on their behalf, with all costs borne by the violator. This marks the first time that liability provisions under the Water Pollution Prevention chapter have been publicly disclosed in complete legal text since the implementation of the 2026 年 8 月 15 日 Code.

I. Interpretation of Relevant Code Provisions

Article 302 stipulates that the housing and urban-rural development authority under the State Council, together with development and reform and ecological environment authorities, shall organize the formulation of national plans related to the construction of urban sewage treatment facilities; local people's governments at or above the county level shall organize housing and urban-rural development, development and reform, ecological environment, water administration, and other authorities to formulate plans related to the construction of urban sewage treatment facilities within their administrative regions, and organize the construction of centralized urban sewage treatment facilities, supporting pipeline networks, and sludge harmless treatment and disposal facilities, while strengthening supervision and management. Mr. Tang emphasized, "This provision writes the three tasks of 'sewage treatment + sludge disposal + supporting pipeline networks' into planning responsibilities, fundamentally closing the loophole that has caused years of buck-passing among local authorities."

Article 304 stipulates that operators of centralized urban sewage treatment facilities and sludge harmless disposal units shall conduct harmless treatment and disposal of sludge, ensuring that the treated and disposed sludge meets national standards, and shall track and record the flow direction, purpose, and quantity of sludge, and report to the urban drainage authority and the ecological environment authority.

Article 1172 contains the penalty provisions: for violations of the above provisions, the urban drainage authority shall order rectification and issue a warning; where serious consequences result, a fine of not less than 10 万 yuan and not more than 20 万 yuan shall also be imposed; where the violator refuses to rectify, a unit with treatment capacity shall be designated to conduct remediation on their behalf, with all costs borne by the violator.

II. Three "Hidden Liabilities" Beyond Fines

Mr. Tang analyzed that after the Code takes effect, the actual liabilities borne by operating units extend far beyond the single "fine of 20 万" — three implicit obligations are superimposed:

• Planning Responsibility — When local people's governments at or above the county level organize the formulation of plans related to the construction of urban sewage treatment facilities within their administrative regions, operating units are required to provide baseline data, operational assessments, and planning recommendations; otherwise, plans may deviate from actual operational capacity.
• Tracking and Recording Responsibility — The requirement for full-process traceability of sludge flow direction, purpose, and quantity effectively upgrades the operating unit's internal ledgers to "quasi-regulatory-grade evidence"; in the event of cross-border pollution disputes, operating units must self-certify their sludge disposal compliance, and missing ledgers will directly constitute a factual violation.
• Joint Liability for Remediation by Designated Units — "Where the violator refuses to rectify, a unit with treatment capacity shall be designated to conduct remediation on their behalf, with all costs borne by the violator" means that in addition to fines, the violator must bear all engineering costs of the designated remediation unit. Mr. Tang believes this "has an even greater deterrent effect on small and medium-sized sewage treatment plants than the fines themselves."

III. Impact on TIANYI TECH's Business

From an enterprise perspective, the Code provisions release three market opportunities:

• Sludge Disposal Equipment and O&M Services — A large number of small and medium-sized sewage treatment plants have weak sludge disposal links and require upgrades; TIANYI TECH can provide process packages and complete equipment for sludge deep dewatering, low-temperature drying, aerobic fermentation, and anaerobic digestion.
• Intelligent Tracking and Recording Platform — The full-process electronic ledger + GPS tracking + receiver qualification verification for sludge from discharge to final disposal corresponds to a SaaS-based compliance management platform, which TIANYI TECH can rapidly expand as a module on its existing Smart Water platform.
• Remediation Trusteeship Services — The Code's remediation-by-designation provision corresponds to market opportunities for "taking over non-compliant sewage treatment plants," but requires corresponding qualifications and engineering capability reserves; TIANYI TECH can cooperate with local governments and urban investment platforms to proactively position itself for such emergency trusteeship businesses.

IV. Compliance Recommendations

Mr. Tang recommends that urban sewage treatment plant operators among the company's clients immediately conduct three self-inspections:

• Check whether the sludge disposal contract clearly specifies the destination, purpose, and quantity;
• Establish an electronic ledger and transport tracking system for sludge disposal;
• Connect with the ecological environment authority's pollutant discharge permit filing system to verify that the disposal method and final destination are consistent with the items stated in the permit.

Where problems are identified during self-inspection, proactive reporting and corrective action should be initiated in the early stage of the Code's implementation to secure room for recognition of lighter or mitigated penalties.

About TIANYI TECH

TIANYI LIMITED, headquartered in Hong Kong with nationwide reach and a global footprint, specializes in process design, equipment manufacturing, engineering construction, and smart operation in the fields of wastewater treatment and reclaimed water reuse, as well as comprehensive utilization of reclaimed water. The company's business covers centralized industrial wastewater treatment in industrial parks, municipal wastewater upgrading and retrofitting, reclaimed water reuse, and smart water platforms, providing clients with full life-cycle services from feasibility study, design, and construction to operation and maintenance.

Source: Publicly reposted by Luohe Municipal Urban Management Bureau from the "Ecological Environment Code of the People's Republic of China" (adopted at the Fourth Session of the Fourteenth National People's Congress on 2026 年 3 月 12 日, effective as of 2026 年 8 月 15 日).