BEIJING, June 3 (Xinhua) -- A draft regulation on the protection of water resources and ecological environment of the Taihu Lake, the third largest freshwater lake in China, was made public Wednesday to solicit opinions.

According to the draft posted on the website of the State Council's Legislative Affairs Office, www.chinalaw.gov.cn, local authorities must readjust their economic structure and eliminate outdated industries with high water consumption and pollution.

Recycled paper-making companies with a yearly output of less than 50,000 tonnes, as well as other pollutant-discharging companies with backward production capacities, and those do not operate in accordance with national industrial policies or meet discharge standards, could no longer operate near the Taihu Lake, the draft said.

Taihu has been plagued by algae due to severe industrial pollution in recent years. In 2007, an algae outbreak forced local water plants to stop household water supplies in Wuxi City, Jiangsu Province.

The draft said local government would set discharge limits and annual pollution reduction plans for all polluters near the lake.

Establishment of new chemical and pharmaceutical enterprises and projects, sewage outlets, garbage recycling facilities, golf courses, floating restaurants, poultry and livestock farms should not be allowed near the lake, the draft regulation said.

It also banned storage and transportation of toxic materials, and the sales and use of laundry detergent containing phosphorus near the Lake, and demanded limited use of fertilizer and pesticide.

Those who violate the draft regulation would face administrative punishment, in addition to fines ranging from 10,000 yuan (1,464 U.S. dollars) to 500,000 yuan or one to three times of the money involved in their illegal activities, and would have to pay for government efforts to undo the damages they have caused, the draft said.

The public is invited to comment on the draft regulation any time before June 30 via online postings, email or letters.