[Inside Chodong]The Ministry of Environment's 'Strange' Shifts: What Was Wrong Yesterday Is Right Today

'150.9 billion KRW'

The record for the highest fine ever imposed by the government on a company violating environmental regulations in South Korea is expected to be broken soon. The unfortunate subject is none other than HD Hyundai Oilbank. While the fine, which amounts to nearly 70% of Hyundai Oilbank's operating profit of 220 billion KRW in the first half of the year, draws attention, the circumstances surrounding the case have put the Ministry of Environment's 'inconsistent' administration under scrutiny.

The massive fine imposed on a major domestic refinery was related not to oil but to water. The issue began last year with a tip-off. Following a report that Hyundai Oilbank was exporting factory wastewater externally, the Ministry of Environment launched an investigation. The investigation revealed that from October 2019 to December 2021, for over two years, Hyundai Oilbank supplied 950 tons of industrial water daily from its Daesan plant in Seosan, Chungnam Province, to its subsidiaries HD Hyundai Chemical and HD Hyundai OCI, and these companies used the water.

Hyundai Oilbank explained that due to drought in the Daesan area at the time, it could not receive industrial water normally and thus recycled this wastewater. This water was treated recycled water with impurities removed and was also used within Hyundai Oilbank's own plant.

[Image source=Yonhap News]

They claimed that since the water was supplied through sealed pipelines, it was not discharged outside the plant, i.e., into nature, so there was no risk of environmental pollution. Hyundai Chemical and Hyundai OCI also discharged the final wastewater according to legal standards after using the recycled water. They actively cooperated with the Ministry of Environment's investigation and explained these details. They argued that this not only saved water resources but also reduced the total amount of wastewater discharged through recycling, but this argument did not hold.

Under the current Water Environment Conservation Act, when wastewater is reused, it is prohibited to reuse it at a different discharge facility rather than the same one, or to use it for purposes such as toilet water, landscaping water, or firefighting water. The reason Hyundai Oilbank's case became problematic was that the wastewater was reused by a separate legal entity. However, the law has not kept pace with reality.

Hyundai Chemical is a joint venture established by Hyundai Oilbank and Lotte Chemical for petrochemical business, and Hyundai OCI is a joint venture created by Hyundai Oilbank and OCI to produce carbon black used in tire materials. Both are located within Hyundai Oilbank's Daesan plant. Hyundai Chemical uniquely uses desulfurized heavy oil, a byproduct of refining processes, as raw material in Korea. Since multiple legal entities share raw materials and utilities, the factories cannot be distinguished at a glance. Although legally separate, they are effectively one factory.

Despite these explanations, the Ministry of Environment issued a preliminary notice of fine last October and forwarded the investigation results to the prosecution. The prosecution indicted eight related individuals on the 11th, and the case eventually moved to court.

What seemed like a conclusion to the case recently took a turn. On the 25th, the Ministry of Environment announced plans to expand the reuse of industrial wastewater, proclaiming a "killer regulation reform." This allows the reuse of industrial process wastewater discharged between companies, which was previously prohibited. The Ministry explained that due to strong demands from industry and local governments for industrial wastewater reuse, they decided to improve regulations. The government's stance on the same issue involving Hyundai Oilbank has reversed completely in less than a year.

Minister of Environment Han Hwa-jin expressed that regarding the disposition against Hyundai Oilbank, "I think it might have been a bit strict," but maintained the position that retroactive application would not be made. However, why does this decision appear to be an irresponsible attitude lacking both principle and leniency? Was there no room for consideration before imposing fines or prosecuting?

Applause is due for the government's efforts to eliminate unreasonable regulations that constrain corporate activities. It is also true that policies should change when circumstances change. But above all, can companies trust a government that changes its stance so easily?

This content was produced with the assistance of AI translation services.