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Mining companies launch their first attacks on the One Environmental System

17 June 2015 at 1:42 pm

GroundUp Main Photo8 December 2014 was the auspicious date on which the Departments of Environmental Affairs, Mineral Resources, and Water & Sanitation were to start implementing the so-called One Environmental System.

This system was brought to life by an unusually complex law reform process led by the Portfolio Committees of Environmental Affairs and Mineral Resources before the May 2014 elections, with the aim of integrating the mining industry into the environmental management system applicable to other industries, and to streamline (and in many instances, reduce the time required for) environmental and water assessment and authorisation processes.

While the principle of getting mining companies to comply with national environmental legislation was an overdue necessity, the law reform itself has been hampered by problematic legislative drafting, the staggered commencement of different sections of the various pieces of amendment legislation, and incomplete execution – none of which has helped to provide much needed legal certainty.

Always quick to take advantage of any legislative uncertainty, and as demonstrated by the examples below, mining companies have almost immediately found ways to attack and circumvent their obligations under the One Environmental System.

Adding insult to injury, despite many assurances in Parliament and elsewhere that they were “more than ready” to implement the new system, the Department of Mineral Resources (DMR) has so far either been completely unwilling to enforce the law, or has interpreted it in such a way as to defeat the purposes of sound environmental management. As far as we can tell, only the most initial steps have been taken to start building the necessary capacity and designation within the DMR to fulfil its new role of monitoring and enforcing compliance with NEMA. In brief, all signs so far point to the fact that civil society’s dire warnings about the risks of placing the implementation of NEMA in the hands of the Department of Mineral Resources were entirely well-founded.

Elandsfontein and Mineral Sands Resources

In a controversial case in the Western Cape, shortly before the One Environmental System was to come into effect on 8 December 2014, mining company Elandsfontein Exploration and Mining (Pty) Ltd (EEM) withdrew its application for environmental authorisation for NEMA listed activities by provincial environment authorities. But it has nevertheless commenced clearing vegetation and building roads – some of the very listed activities that were the subject of its application just withdrawn.

EEM claims not to need authority from the environmental authorities, since DMR is now the competent authority to administer and enforce NEMA – under the new system. But instead of seeking environmental authorisation for these activities from DMR, it relies on its environmental management programme (EMPR) – a document compiled and approved by the DMR in terms of the MPRDA – in order to go about its business. That clearing vegetation and road building are not dealt with in that MPRDA-based EMPR means that they are conducting those activities without any mechanism to ensure environmental impacts are mitigated and managed – the purpose of environmental authorisation. Moreover, they are doing so illegally.

Calls on the DMR to stop these illegal activities (to use its powers under the one environmental system to enforce compliance with NEMA­) have been met with a response that would be shocking, if it hadn’t been expected from a department that has never taken its obligation to enforce environmental compliance seriously. The DMR says that the EMPR remains valid until set aside on appeal or by a court, and EEM can carry on its “mining activities” until that happens. That the EMPR doesn’t deal with the mitigation and management of environmental damage caused by clearing of vegetation and road-building remains irrelevant to the DMR, notwithstanding its obligation to administer and enforce environmental laws, and NEMA specifically.

Similar problems came to light last week in a hearing in the Western Cape High Court in a civil case involving Australian mining company MRC’s Tormin Mineral Sands Project on the West Coast. Here, the DMR appears to have taken the position that, where a mining company has environmental authorisation for a specified activity under NEMA, it can continue to expand that activity indefinitely, regardless of the limits imposed by the original authorisation. This approach entirely defeats the very purpose of environmental authorisation, which is to allow specified, limited activities to take place under strict conditions in order to carefully manage and monitor adverse environmental impacts. The DMR has effectively told the company in this case that it can expand its mining operation beyond the originally authorised footprint without limit and without any further requirements for authorisation.

Aquarius Platinum

But, further north, an even larger assault on the One Environmental System was being planned. On 22 May 2015, judgment was handed down in the Gauteng Division of the High Court in the matter of Aquarius Platinum (SA) (Pty) Ltd v Minister of Water and Sanitation and others, setting aside the publication of the National Environmental Laws Amendment Act 25 of 2014 (NEMLAA) – a key piece of legislation in the infrastructure of the One Environmental System.

The Constitution provides that NEMLAA remains in place and in effect and will only be set aside if the Constitutional Court confirms the High Court’s order. Having said that, the setting aside of NEMLAA would obviously have huge ramifications for the implementation of the One Environmental System.

The judgment set aside the publication of NEMLAA on the grounds that the President should not have published this Act without the promulgation of regulations required to implement the Act. NEMLAA introduced a number of amendments to the National Environmental Management Act, 1998 (NEMA) and to the National Environmental Management: Waste Act, 2008 (NEMWA), all part of the suite of Acts which gave rise to the One Environmental System.

The setting aside of NEMLAA in its entirety was not an outcome expressly sought by Aquarius Platinum. Aquarius Platinum’s application to court stemmed from its frustration with the Department of Water & Sanitation (DWS) and the DMR in trying to obtain approval for a proposed project (the West-West Pit Project). Aquarius Platinum plans to use the West-West Pit to deposit tailings generated by its operations at its Kroondal and Marikana mines; the mining company contends that the West-West Pit Project will have to be completed by June 2016 because the company’s present tailing storage facility is fast running out of capacity.

To build the West-West Pit, Aquarius Platinum requires a water use licence. The company applied for the licence in 2012, but when no decision had been made by the DWS by October 2014, the company instituted proceedings in the High Court. Shortly thereafter, on 28 November 2014, the DWS refused Aquarius Platinum’s application for a licence because it was not satisfied that the design of the West-West Pit provided sufficient protection to water resources. While the DWS’s delay in rendering a decision was no doubt frustrating, the DWS had consistently communicated to Aquarius Platinum that a licence would not be granted unless Aquarius Platinum was prepared to install a particular pit liner to prevent seepage from its tailings. (Note 1)

The second part of Aquarius Platinum’s application to court concerned NEMLAA and the amendments which it brought about to NEMWA. These amendments mean that NEMWA now applies to the stockpiles and residue deposits, and that mining companies who have stockpiles and residue deposits must apply to the DMR for both environmental authorisation and a waste management licence. Given the scope of hazardous waste generation and storage in tailings dams and dumps on mining sites (the mining sector is the single biggest generator of waste in South Africa), the mining industry strongly resisted having to be regulated by NEMWA during the law reform process. That battle was lost in Parliament, and so disposal pits such as the proposed West-West Pit now require a waste management licence under NEMWA.

However, the amended NEMWA provides that residue stockpiles and residue deposits must be managed in a manner to be prescribed by regulation, and yet these regulations have not yet been finalised. Aquarius Platinum argued that since the regulations will prescribe how mine residues are to be managed and will inform how the environment is to be protected, it is not possible for the Minister of Mineral Resources to consider any application for a waste management licence in respect of mine residues until the regulations are finalised and published.

While Aquarius Platinum is correct in identifying that the lack of published regulations can lead to a degree of uncertainty with regard to the precise process to be followed and factors to be considered in assessing applications, the Minister of Mineral Resources is not prevented from considering applications for waste management licences in the absence of these regulations. The power to consider and issue licences exists and could have been exercised. However, Aquarius Platinum’s Heads of Argument reveal that an attempt was made to engage with the DMR regarding the import of NEMWA (albeit in the context of requesting an exemption from its provisions) and that the DMR failed to even acknowledge receipt. One has to wonder whether Aquarius Platinum would have approached the High Court on this point if the DMR had been responsive and had assisted Aquarius Platinum in complying with the obligations created by NEMWA.

Aquarius Platinum did not intend for NEMLAA to be set aside in its entirety: It framed the relief it requested narrowly, essentially asking the court for special treatment: declaring its particular project to be authorised by the DMR without being subjected to any new waste law requirements. (Note 2) The court, relying on Aquarius Platinum’s argument that the President’s decision to publish NEMLAA without the regulations was irrational, held that narrowly tailoring the relief of constitutional invalidity to the West-West Pit Project would not be appropriate. This led the court to set aside (subject to confirmation by the Constitutional Court) the publication of NEMLAA on the grounds that “the conundrum created by the publication of NEMLAA without the regulations has a far wider impact than simply on Aquarius”.

What next for the One Environmental System?

It is not clear how long it will take for the Constitutional Court to consider the validity of the High Court’s decision to set aside NEMLAA, but we understand that the Department of Environmental Affairs, which – along with the DMR – did not file answering papers in the Aquarius Platinum Case – have also given notice of its intention to appeal the judgment.  Our criticism of many aspects of the One Environmental System aside, it is now essential that the three departments stand firm and united to defend the One Environmental System, or years of law reform will have been undone.

There are also still a number of other outstanding and urgent steps that need to be taken by the various Ministers, Departments and Portfolio Committees to support the roll-out of the One Environmental System. This includes:

  • publication of the Regulations Regarding the Planning and Management of Residue Stockpiles and Residue Deposits from a Prospecting, Mining, Exploration, or Production Operation (published for comment on 14 November 2014). We understand these to be close to finalisation, and – whether the High Court was correct in the Aquarius judgment or not – the Minister of Environmental Affairs should publish those regulations as soon as possible;
  • in addition to the regulations mentioned above, the publication by the Minister of Environmental Affairs of the final Regulations pertaining to the Financial Provision for the Rehabilitation, Closure and Post Closure of Prospecting, Exploration, Mining or Production Operations, under NEMA;
  • steps to be taken to bring into effect a number of important provisions of the MPRDAA of which the commencement was suspended by proclamation of the President in June 2013. An example is section 38B, which provides that an EMPR approved under the MPRDA prior to 8 December 2014 will be deemed to be an environmental authorisation under NEMA. Notwithstanding commencement of the one environmental system on 8 December 2014, commencement of those provisions was suspended indefinitely;
  • finalisation of the 2013 MPRDA amendment that was passed by the National Assembly in May 2014, without proper consultation, among other issues, and which the President referred back to the National Assembly earlier this year. Little is known about how Parliament plans to handle the referral and even less is known about when that amendment process will be concluded;
  • by the DMR, a significantly improved application of NEMA in applications for authorisations, and meaningful results in monitoring and enforcing compliance with NEMA. If the DMR is not willing or able to fulfil these functions in accordance with the law, these functions should be taken over by and funds reallocated to environmental authorities before further damage is done.

Footnotes

Note 1: Aquarius Platinum now seeks to review the decision of the DWS to refuse its application for a licence. However, given that Aquarius Platinum and the DWS disagree on the efficacy of the measures proposed to limit pollution, oral evidence will have to be considered by the court, and this issue will be dealt with at a later date.

Note 2: Aquarius Platinum asked that the court order that the licencing provisions of NEMWA are not applicable to the West-West Pit Project. Before NEMLAA amended NEMWA, residue stockpiles and deposits were regulated by Regulation 73 of the Regulations published in terms of the Mineral and Petroleum Resources Development Act, 2002. Aquarius Platinum argued that the DMR, by allowing it to amend its EMPR to include the construction and operation of the West-West Pit Project, had already authorised the project (since it was not disputed that the application for an amendment of the EMPR complied with Regulation 73).