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Court strikes down the south african fracking regulations

2019-07-25

On 4 July 2019, the South African Supreme Court of Appeal struck down the legal regulations that regulated hydraulic fracturing (fracking). It found that the Minister of Mineral Resources had exceeded their powers when promulgating the Regulations for Petroleum Exploration and Production 2015, finding that the power to regulate the environmental aspects of fracking lay exclusively with the Minister of Environmental Affairs.

Various farmers' and non-profit organisations argued that the Minerals Minister had exceeded their power in attempting to regulate the process followed when applying for an environmental authorisation for fracking. They argued that the Minerals Minister may have had this power in the past, but that the amendments to the mining and environmental legislation in 2013 that created the One Environmental System had stripped the Minerals Minister of all power to regulate environmental aspects relating to prospecting, mining, exploration and production, and had transferred this power to the Environmental Minister. They argued that the Minerals Minister had accordingly acted outside their power (ultra vires) when passing the Petroleum Regulations.

In turn, the two Ministers' argued that the Minerals Minister was still empowered to enact the regulations, albeit now by the Environmental Impact Assessment Regulations 2014, which the Environment Minister had promulgated. This argument was ultimately rejected by the court.

The court considered two questions. First, did the Petroleum Regulations violate the principle of legality? Namely, did the Minerals Minister exceed their power when promulgating the Petroleum Regulations?

On the first question, the court analysed the history and the framework of the Mineral and Petroleum Resources Development (MPRDA) and the National Environmental Management Act (NEMA).

In 2013 the MPRDA and NEMA were overhauled through a series of amendments to create the One Environmental System. Before this both acts dealt with environmental matters. The Minerals Minister was responsible for regulating the environmental impacts of mining and petroleum production and granting the required environmental management plans and programs, while the Environmental Minister was responsible for regulating all other environmental matters. The 2013 overhaul, however, removed the Mineral Minister's power to regulate environmental matters, consolidated all environmental legal provisions into NEMA, and made the Environmental Minister legally responsible for setting regulatory frameworks, norms and standards.

Did the Minerals Minister retain the power to promulgate the Petroleum Regulations after the creation of the One Environmental System in 2013? The court found that after the 2013 overhaul the only regulation-making powers regarding the environmental impacts of these activities, are those vested in the Environmental Minister in terms of NEMA. The entire purpose of the overhaul was clearly to strip away the Mineral Minister's power to make regulations on environmental impacts.

The court therefore found that after the 2013 overhaul, the Minerals Minister had no power to promulgate regulations relating to either the management of the environmental impacts of exploration and the production of petroleum, or the process and requirements of an application for an environmental authorisation. Only the Environment Minister had the power to regulate these matters. The Minister of Minerals could not legally exercise powers that they didn't have.

The court accordingly held that the Minerals Minister had acted outside their power when promulgating the Petroleum Regulations, and that the regulations should be set aside on this ground alone.

The second question the court considered was if the Petroleum Regulations were promulgated in a procedurally unfair manner, and could be set aside because the Mineral Minister's procedure contravened the Promotion of Administrative Justice Act (PAJA).

Here the argument was that the process was procedurally unfair because when the draft regulation was published for public comment, it didn't include the contemplated list of substances that would be prohibited in fracking.

In order for this argument to succeed, the court would have to first decide if the promulgation of regulations by a minister in terms of an act of parliament constituted administrative action regulated by PAJA. Unfortunately, the court's answer to the first question meant that it wasn't necessary to consider the second question. The Supreme Court of Appeal did, however, take the opportunity to weigh in on this debated issue, and stated that it had previously explained that there is no authority for the proposition that the making of regulations by a minister generally is administrative action in terms of PAJA and added that the final word on this subject may not have been spoken.

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