guide - environmental law in south africa

GUIDE - ENVIRONMENTALLAW IN SOUTH AFRICA

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BOWMANSBOWMANS

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Contents

04 Introduction

06 OurFirm

07 OurFootprintinAfrica

08 OurEnvironmentalPractice

09 OverviewofSouthAfricanEnvironmentalLaw

18 TransactionalConsiderations

22 KeyContacts

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Guide - Environmental Law in South Africa

Introduction

This is the first edition of our Guide to Environmental Law in South Africa. It is intended to provide a selective overview of certain aspects of environmental law in South Africa and to answer some of the most frequently asked questions regarding environmental law in a transactional context.

Wewill,infuture,expandthisguidetoalsocoverenvironmentalregulatory

considerationsinKenya,TanzaniaandUganda,alongwithotherAfricanjurisdictions.

Thecontentsofthisguideareforreferenceonlyand

shouldnotbeconsideredasubstitutefordetailed

legaladvice.ItiscorrectasofDecember2019.Ifyourequire

furtherinformationorspecificadvice,pleasecontactone

ofthekeycontactslistedattheendofthispublication.

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Our Firm

WithsevenofficesinfiveAfricancountriesandover400specialisedlawyers,we

drawonouruniqueknowledgeofthebusinessandsocio-politicalenvironmenttoadviseclientsonawiderangeoflegalissues.

Everywherewework,weofferclientsaservicethatuniquelyblendsexpertiseinthelaw,knowledgeofthelocalmarketandanunderstandingoftheirbusinesses.Ouraimistoassistthemtoachievetheirobjectivesassmoothlyandefficientlyaspossiblewhileminimisingthelegalandregulatoryrisks.

Ourclientsincludecorporates,multinationalsandstate-ownedenterprisesacrossarangeofindustrysectorsaswellasfinancialinstitutionsandgovernments.

Ourexpertiseisfrequentlyrecognisedbyindependentresearchorganisations.WewererankedfirstbydealvalueandsecondbydealcountinMergermarket’s2018Africaleaguetablesforlegaladvisors.WereceivedawardsinfiveoutofsixcategoriesattheDealmakersEastAfricaAwardsfor2018:toplegaladviserinM&Aforbothdealflowandvalue,toplegaladviserinGeneralCorporateFinanceforbothtransactionflowandvalue,andadvisedontheDealoftheYear.IntheDealmakers SouthAfricaAwardsfor2018,wewereplacedfirstfordealflowintheGeneralCorporateFinancecategory.

WewerenamedSouthAfricanLawFirmoftheYearfor2018intheChambersAfricaAwardsforExcellence.Wealsoreceivedthe2019awardsforTransportationandInfrastructureTeamoftheYearandTMTTeamoftheYearattheAfricanLegalAwardshostedbyLegal Week andtheCorporateCounselAssociationofSouthAfrica.

Bowmans exists to help our clients overcome legal complexity and unlock opportunity in Africa. Our track record of providing specialist legal services, both domestic and cross-border, in the fields of corporate law, banking and finance law and dispute resolution, spans over a century.

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Our Footprint in Africa

WeprovideintegratedlegalservicesthroughoutAfricafromsevenoffices

(CapeTown,DaresSalaam,Durban,Johannesburg,Kampala,MokaandNairobi)infivecountries(Kenya,Mauritius,SouthAfrica,TanzaniaandUganda).Weworkcloselywithouralliancefirm,AmanAssefa&AssociatesLawOffice,inEthiopia,andourbestfriendsinNigeriaandMozambique(UdoUdoma&Belo-OsagieandTacianaPeãoLopes&AdvogadosAssociados,respectively).WealsohavestrongrelationshipswithotherleadinglawfirmsacrosstherestofAfrica.WearerepresentativesofLexMundi,aglobalassociationwithmorethan160independentlawfirmsinallthemajorcentresacrosstheglobe.Thisassociationgivesusaccesstothebestfirmsineachjurisdictionrepresented.

Mozambique

Kenya

Tanzania

South Africa

Nigeria

Uganda

Mauritius

Best friends

Bowmans offices

Significant transaction or advisory experience

Alliance firms

Ethiopia

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DoingbusinessinAfrica,asinmostinternationaljurisdictions,requiresspecialisedcounseltoeffectivelymanagecorporateenvironmentalrisksanddecision-making.

WeareoneofAfrica’sleadingenvironmentallawfirms,offeringrealdepthandabroadrangeofexpertiseinenvironmentallaw.

Ourservicecoverslegalriskmitigationandmanagement,permitting,projectsanddevelopments,appealsagainstadministrativedecisionsandjudicialreviews,criminalandadministrativedisputes,litigation,impactsandcompliance,due-diligenceinvestigationsandcomplianceauditing.

Ourspecialistenvironmentallawyersareequippedwithapracticalunderstandingofboththelawanditsapplicationbytheregulatorsandareabletohandleenvironmentalmattersinallthejurisdictionsinwhichwearelocated.

Wehaveastrongcommercial-environmentalunderstandinginatransactionalcontext,includingwithrespecttotheintersectionamongsectorssuchasmining,energyandinfrastructuredevelopments,environmentalissuesandcommunityinterests,pollutionandcontaminatedlandliabilities,aswellasappropriatemechanismsforthemanagementandallocationofrelatedrisksintransactions,theauthorisationrequirementsfordevelopmentsandgeneralenvironmentaltransactionalrisksandmitigation.

Our Environmental Practice

Wefrequentlyrepresentclientswithrespecttoenvironmentalauthorityenforcementactions,compliancenotices,directives,appealsandreviews,aswellasincriminalprosecutionsonenvironmentalmatters.

Chambers & PartnershasrankedourSouthAfricanEnvironmentalPracticeinBand1forthepastfiveyears(2015to2019).Weareregardedasan,‘Impressiveenvironmentalgroupwithaprominentpositioninthemarket”.Clientsarequotedinthe2018editionofthepublicationassayingthatwe:‘…havebeenexcellentinallregards–strategy,guidanceandlegalaction’andthatwe,‘giveresponsibleandprofessionaladviceand,whereappropriate,adviseclientsagainstunnecessaryorimprudentlitigation’.

Weservethetop-endoftheSouthAfricanandbroaderAfricanmarket,advisingongovernmentprocesses,commerciallendingandmergersandacquisitions(includingcross-jurisdictionalworkintransactionalandothermatters).Ourclientsincludelargelistedcorporationsandthepublicsector.

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OVERVIEW OF SOUTH AFRICAN ENVIRONMENTAL LAW

1.WhataretheprincipalenvironmentallawsinSouthAfrica?

EnvironmentalmattersarehighlyregulatedinSouthAfrica,withthecountryhavinganenvironmentalrightenshrinedinitsConstitution,coupledwitharangeofenvironmentallawsatanational,provincialandmunicipal(localgovernment)level.

TheConstitutionofSouthAfricaprovidesthatthe‘environment’genericallyisafunctionalareaofconcurrentnationalandprovinciallegislativecompetence,whilesomeaspectsofmorespecificenvironmentalrelatedconsiderations(suchasairpollution,potablewatersupplysystems,anddomesticwastewaterandsewagedisposalsystems)arewithintheexecutiveandadministrativeauthorityoflocalgovernment.

TheNationalEnvironmentalManagementAct,107of1998(NEMA)istheprincipalenvironmentalstatute.Alignedwiththisareseveralso-called‘specificenvironmentalmanagementActs’(SEMA),includingthe:

• NationalWaterAct,36of1998(theNationalWaterAct);

• NationalEnvironmentalManagement:WasteAct,59of2008(theWasteAct);

• NationalEnvironmentalManagement:AirQualityAct,39of2004(theAirQualityAct);

• NationalEnvironmentalManagement:BiodiversityAct,10of2004(theBiodiversityAct);

• NationalEnvironmentalManagement:IntegratedCoastalManagementAct,24of2008(theCoastalManagementAct);and

• NationalEnvironmentalManagement:ProtectedAreasAct,57of2003(theProtectedAreasAct).

Variousregulations,aswellasnormsandstandards,havebeenpublishedunderNEMAandtheSEMAs.

Otherlegislationalsoaddressesenvironmentalissuesatanationalandprovinciallevel.Thisincludesthe:

• MineralandPetroleumResourcesDevelopmentAct,28of2002(theMPRDA)inthecontextofmineralprospectingandmining,andoilandgasexplorationandproduction-relatedactivities;

• WaterServicesAct,108of1997;• NationalForestsAct,84of1998;• NationalHeritageResourcesAct,25of1999

(theHeritageResourcesAct);and• MarineLivingResourcesAct,18of1998

(theMarineLivingResourcesAct).

InadditiontotheBiodiversityActandProtectedAreasAct,natureconservationandbiodiversity-relatedmattersareregulatedunderprovinciallegislationthatappliesinSouthAfrica’snineprovinces.

2.Whattypeofenvironmentalconsents,authorisations,approvals,licencesorpermitsmayberequiredforaneworexistingdevelopmentoroperation?

NEMAandmanyoftheSEMAsaswellasotherenvironmentalstatutes,requireauthorisations,licencesorpermitstobeobtainedbeforeparticularactivitiescancommenceorbeundertaken.

Obtainingconsents,orregistrationofactivitiesorfacilities,isalsotypicallyrequiredfornaturalresourceextractionorutilisation,suchasintheminingandproductioncontext,forindustrialoperations,inthecaseoffishingandforestry,andfortakingwaterfromwaterresources,orimpactingonwaterresources.

Consentsmayberequiredunderlegislationregulatingthestorageoruseofcertaintypesofhazardoussubstances,nuclearandradioactivity-relatedactivities,biodiversityutilisationandimpacts,conservationandactivitiesinprotectedareas,andcertainagriculturalactivities.

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• CoastalManagementAct–includescomplianceobligationsandrestrictionswithrespecttoactivitieswithinthecoastalzone,orthatmayimpactonthecoastalzone(suchastheuseofcoastalpublicproperty),aswellasmarineandcoastalpollutioncontrol(suchastherequirementtoobtainapermitfordumpingatsea).

• AirQualityAct–requiresthelicensingoflistedactivitiesthatresultinatmosphericemissions,withspecificminimumemissionstandardsbeingprescribedforsuchactivities,aswellasphaseddatesbywhencompliancewiththeprescribedemissionstandardsmustbeachievedbyexistingornewoperations.TheAirQualityActrequiresthereportingofemissions;includesmechanismsforairpollutioncontrol(suchasbycreating‘PriorityAreas’aroundthecountrywhereairqualitymanagementplansarerequiredtobeinplace);appliesdustcontrolregulations;andestablishescategoriesof‘controlledemitters’whichalsohaveregulatedemissionstandardsthatmustbecompliedwith.Arecentfocushasbeenonestablishingmechanismsforregistration;measuringandreportingregardinggreenhousegasemissionsinlightofacarbontaxregimethatappliesinSouthAfricaintermsoftheCarbonTaxAct,15of2019;andotheranticipatedtighterclimatechangerelatedregulatorycontrols,includingthroughapendingClimateChangeAct.

• HeritageResourcesAct,25of1999–createsvariousformsofheritageprotection,includingpermittingrequirementsforimpactsonheritageresources,andrequiresnotificationtoandapprovalfromtheheritageauthoritiesforcertaintypesofspecifieddevelopmentactivities.

• Provincialandlocalgovernmentlegislation–authorisations,licencesorpermits,oragreementswiththemunicipality,aretypicallyrequiredforactivitiessuchasthestorageofflammablesubstancesordangerousgoods,thedischargeofeffluentintomunicipalsewers,municipalwatersupply,andundertakinglistedscheduledtrades.Permitsareoftenrequiredunder

Activitiesthatcausepollutionorenvironmentaldegradationmayrequireauthorisationbeforetheactivitycancommence.

Environmentallawsthatimposerequirementsforconsents,suchasauthorisations,licencesorpermits,include:

• NEMA–requiresanenvironmentalauthorisationbeforemanytypesofconstruction,development,expansion,decommissioningandotherso-called‘listedactivities’cancommence.Theseincludeactivitiesassociatedwithclearingofindigenousvegetation,transformationoflandandwithrespecttotheexplorationfor,extraction,productionandminingof,mineralandpetroleumresources,aswellastheassociatedclosureordecommissioningofsuchactivities.

• NationalWaterAct–requiresalicenceorotherformofentitlement,suchasageneralauthorisation,forundertakingwateruses,whichinclude:abstractivewateruses,variouseffluentdischargeandwaste-relatedactivitiesthatmayimpactonwaterresources,aswellasactivitiesentailingphysicalimpactson,orinproximityto,waterresources.

• WasteAct–requireslicensingoflistedwastemanagementactivitiesorcompliancewithnormsandstandardsforcertainotherlistedactivities;currentlyregulatesresiduedepositsandresiduestockpilesinthecontextofmining,productionandrelatedoperations;andalsoimposesobligationsrelatingtothereporting,handlingandremediationofcontaminatedland.Contaminatedsitesmayneedtobereportedtotheenvironmentalauthoritiesandarepotentiallysubjecttoremediationorders,beingdeclaredasremediationsitesandrecordedontheSouthAfricancontaminatedlandregisterandwiththeDeedsRegistry.Theenvironmentalauthoritymayimposeconditionsthatmustbecompliedwithinthetransferofownershipofremediationsites.

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• NationalWaterAct–anownerofland,apersonincontroloflandorapersonwhooccupiesorusesthelandonwhichanyactivityorprocessisorwasperformedorundertakenoranyothersituationexists,whichcauses,hascausedorislikelytocausepollutionofawaterresource,musttakeallreasonablemeasurestopreventanysuchpollutionfromoccurring,continuingorrecurring.

NEMAandtheNationalWaterActallowfordirectivestobeissuedbytherelevantauthorities(suchaswhenthestatutorydutyofcareisnotbeingadequatelymet)andforremediationorothercosts,whenincurredbytheauthorities,toberecoveredfromawidecategoryofpersons.Asidefrompersonswhoareresponsibleforthepollutionordegradation,aswellasownersofthelandandtheirsuccessor-in-title,personsincontrolof,orwhohadtherighttousethelandattherelevanttimes,orwhonegligentlyfailedtopreventtheactivityorthesituationcomingabout,maypotentiallybeliableforreasonableremediationcosts.

SimilarbroadlystatedgeneralobligationsarecontainedincertainoftheSEMAsandapplywithrespecttothespecificsectorsregulatedundertheSEMAs,suchasthedutytoavoidcausingadverseeffectsonthecoastalenvironmentcontainedintheCoastalManagementAct.ThereisalsoageneraldutyinrespectofwastemanagementandspecificdutiesofpersonstransportingwastecontainedintheWasteAct(includingthatanypersonwhosellsaproductthatmaybeusedbythepublicandthatislikelytoresultinthegenerationofhazardouswastemusttakereasonablestepstoinformthepublicoftheimpactofthatwasteonhealthandtheenvironment).

Inrespectofwaste,NEMAcontainscradle-to-graveprinciples,whichareincreasinglybeinggivendirectlegaleffectthroughtheWasteAct,creatingextendedproducerresponsibilityforcertainproductsandmaterials.Requirementsforcompulsoryindustrywastemanagementplansforarangeofsectors,includingthetyreindustry,thepaperandpackagingindustry,theelectricalandelectronicindustry,andthelightingindustryhavealsobeenpublished.

provinciallegislationforactivitiesthatimpactprotectedanimalorplantspecies,whilenoisecontrolandwasterelatedlegislationalsoappliesincertainprovinces,amongstotherenvironmentallaws.

Anenvironmentalimpactassessment(EIA),orthelessonerousBasicAssessmentReport(BAR)process,orotherformsofimpactassessment,oftenhavetobeconductedpriortoobtainingauthorisationforundertakingregulatedactivities.NEMAandtheWasteAct,amongotherlegislation,requireanenvironmentalauthorisationorwastemanagementlicencetobeprecededbyanimpactassessment,eitheranEIAorBAR,dependingonthenatureoftheintendedactivity.

3.Ifaprojectordevelopmentdoesnotrequireconsents,authorisations,approvals,licencesorpermitsintermsoftheenvironmentallaws,whatgeneral‘dutyofcare’orothersimilarcomplianceobligationsarethereintermsoftheenvironmentallaws?

UndersomeoftheSEMAs,therearespecifiedactivitiesthat,whilenottriggeringtheneedforlicences,insteadrequirecompliancewithpublishednormsandstandards,aswellaspossibleregistrationoftheactivity.

Anoverarchingstatutoryenvironmental‘dutyofcare’obligationisimposedinsection28ofNEMAandsection19oftheNationalWaterAct,creatingseparatebutsimilargeneraldutiesthathavetobeobservedregardingthepreventionandremediationofpollutionorenvironmentaldegradation:

• NEMA–requiresthatanypersonwhocauses,hascausedormaycausesignificantpollutionordegradationoftheenvironmentmusttakereasonablemeasurestopreventsuchpollutionordegradationfromoccurring,continuingorrecurringor,insofarasitisauthorisedbylaworcannotreasonablybeavoidedorstopped,tominimiseandrectifysuchpollutionordegradation.Personsuponwhomtheseobligationsareplacedincludeownersoflandorpremises,personsincontroloflandorpremises,orpersonswhohavearighttousethelandorpremises.

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Dependingonthecategoryoflistedactivityforwhichanenvironmentalauthorisationissought,whichisdeterminedbytheListingNoticeinwhichtheactivityappears,applicationsentaileitheraBAR(ashorterprocedure)orascopingandEIA(alengthierprocedure).

Timeframesfortheenvironmentalauthorisationapplicationprocessaresetoutinthe2014NEMAEnvironmentalImpactAssessmentRegulations:

• TheshorterBARprocess(includingtheperiodforpublicparticipation,considerationoftheBARbytheenvironmentalauthorityandthetimeperiodsexpresslyprovidedforwithinwhichadecisionmustbetakenbytheauthority)maytypicallytakearoundsixmonthstocomplete.

• Ingeneral,thelongerEIAprocessforthe

grantingofanenvironmentalauthorisation(takingintoconsiderationthetimeperiodswithinwhichthescopingreportmustinitiallybesubmitted;thetimeperiodswithinwhichtheEIAmustthereafterbesubmitted;thepublicparticipationprocess;andtheperiodsprovidedforwithinwhichadecisionmustbetakenbytheauthority)maytypicallytakearound10-12months,orpossiblylonger.

ApplicationsforlicencesintermsoftheWasteActandtheAirQualityActarealsosubjecttotheseprocessesintermsofNEMA.

AnapplicationforawateruselicenceundertheNationalWaterActcanoftentakelengthytimeperiods.IntermsoftheWaterUseLicenceApplicationandAppealRegulations,theprocedure(includinganysiteinspection,ifnecessary;publicparticipationperiods;submissionoftechnicalreports;andconsiderationofandadecisiononthefullapplicationandrelevantreportsbytheDWS)maytakeoverayeartocomplete.

4.Whichauthoritiesissueenvironmentalconsents,authorisations,approvals,licencesorpermits?

Eachstatuteprescribestherelevantcompetentauthority.However,thekeygovernmentdepartmentsandagenciesthatareinvolvedintheadministrationandenforcementofenvironmentallawsinclude:

• DepartmentofEnvironment,ForestryandFisheries(DEFF)andtherelevantprovincialEnvironmentDepartments;

• DepartmentofWaterandSanitation(DWS);• DepartmentofMineralResources(DMR);• DepartmentofEnergy(DoE);• SouthAfricanHeritageResources

Agency(SAHRA);• DepartmentofAgriculture;and• Metropolitan,districtandlocalmunicipalities.

Ataprovinciallevel,environmentaldirectoratesinthenineSouthAfricanprovincialgovernmentsareresponsiblefortheadministrationandenforcementofaspectsofenvironmentallawintheprovinces.

5.Whatisthetypicaltimeperiodrequiredtoobtainenvironmentalconsents,authorisations,approvals,licencesorpermits?Ispublicparticipationrequiredintheprocess?

Thetimeperiodforobtainingenvironmentalconsentswilldependontheapplicablelegislationandtheauthorisationprocessthatisprescribedunderthelegislation.Thismusttakeintoaccountthenatureandextentoftechnicalinvestigationsthatmaybeneeded,publicparticipationrequirementsandtheextentofopposition,andtimeperiodsfortheauthoritytoreviewandconsidertheapplication,amongotherconsiderations.

NEMA,beingtheprincipalSouthAfricanenvironmentalstatute,requiresthatanenvironmentalauthorisationmustbeissuedbeforealistedactivitymaycommence,withadiverserangeover120listedactivitiescurrentlyapplyingunderNEMA,continuedinthreeseparateListingNoticespublishedin2014.

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SEMAs(suchaswastemanagementlicencesintermsoftheWasteAct,atmosphericemissionlicencesintermsoftheAirQualityActandwateruselicencesundertheNationalWaterAct)aresubjecttoauthority‘review’periods,atwhichtimetheconditionsofthelicencemaybeamendedorotherwisevaried.

Changestoconditionsduringtheperiodofthepermit,licenceorauthorisationcouldalsobemadebytherelevantauthorityunderothercircumstancesasstipulatedintheapplicablelegislation,orotherwiseasallowedintermsoftheconditionsofthepermit,licenceorauthorisation.

Theconditionscontainedinthepermit,licenceorauthorisationmustbeadheredto,withafailuretocomplynotonlybeinganoffence,butalsopotentiallyresultinginthevariation,withdrawalorsuspensionofthepermit,licenceorauthorisation,eitherintermsoftheconditionsoftheauthorisationitself,ortheapplicablelegislation.

7.Arethereanylocalownershiporempowermentrequirementsinrelationtotheissuingandmaintainingofenvironmentalconsents,authorisations,approvals,licencesorpermitsoraresuchconsentsissuedwithanylocalownershiporempowermentobligationsasconditionsthereto?

TheMarineLivingResourcesActprovidesthatonlyadefined‘SouthAfricanperson’may(unlessotherwisedeterminedbytherelevantMinisterinrelationtoholdersof‘existingrights’)acquireandholdrightsascontemplatedinSection18,includingcommercialfishingrights.

Otherthanincertainstatelicensing,permittingandauthorisationprocesses,thereisno‘hardlaw’thatanyprivateentityinSouthAfricamustmeetspecificbroad-basedblackeconomicempowerment(B-BBEE)targetsormustimplementaB-BBEEpolicy.TheBroad-BasedBlackEconomicEmpowermentAct,53of2003(BEEAct)doesnotprovideforoffencesorpenaltiesrelatingtoB-BBEEperformancebutratherseeks,throughtheeconomicmeasuresdiscussedbelow,tofacilitateauniformapproachtoB-BBEEintheSouthAfricaneconomy.

6.Whatisthesecurityoftenureonceissuedwithanenvironmentalconsent,authorisation,approval,licenceorpermit?Cansuchconsentsbewithdrawn,suspendedorcancelledandunderwhatcircumstances?

Apublicparticipationprocessmustusuallybeundertakenaspartoftheprocessofapplyingforanenvironmentalconsent.Interestedoraffectedpartiesmaymakesubmissionstotherelevantauthorityastowhetherthepermit,licenceorauthorisationshouldbegrantedorregardingtherequirementsthatshouldbeimposedasconditionssoanyadverseeffectsthatwouldariseasaresultoftheissuingoftheconsentcanbemitigated.Thisprocessalsoallowsforaninterestedoraffectedpartytoobjecttothegrantingofapermit,licenceorauthorisationtoapprovetheactivityordevelopment.

Oncethepermit,licenceorauthorisationhasbeenissuedorrefusedbytherelevantauthorityintermsofNEMAoranyotherSEMA,appealsmaybelodgedagainstthedecisionoftheauthority.Pendingtheoutcomeoftheappeal,thedecisionoftheauthoritysubjecttotheappealunderNEMAoraSEMAwillusuallybeautomaticallysuspended.Bywayofexample,ifadecisiontograntanenvironmentalauthorisationunderNEMAistakenonappeal,theenvironmentalauthorisationwilleffectivelybesuspendedpendingtheoutcomeoftheappeal,withconsequentdelaystocommencementofthedevelopmentoractivity.TheappealproceduresareusuallydeterminedintermsofregulationsunderNEMA,certainSEMAsorotherenvironmentallegislation.

UnderthePromotionofAdministrativeJusticeAct,3of2000(PAJA),apersonmayseekaHighCourtjudicialreviewofthedecisiontograntortorefuseapermit,licenceorauthorisation.However,otherthaninexceptionalcircumstances,suchareviewmayonlybesoughtthroughthecourtsonceallinternalremediesprovidedforintheenvironmentallegislationconcernedhavebeenexhausted,suchastheinternalappealprovisions.Onceissued,manyofthepermits,licencesandauthorisationsunderNEMAandthe

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IntermsoftheBEEAct,governmentbodiesandstate-ownedenterprises(SOE)arerequiredtotakeprivatesectorparties’relativeB-BBEElevelsintoaccountwhen(amongotherthings)theyissueanylicenceorotherauthorisationinrespectofeconomicactivity.Assuch,businessesthatinteractwithgovernmentby,forexample,operatinginsectorsthatrequirelicencestoperformtheirparticularactivities,areincentivisedtoincreasetheirlevelsofB-BBEE.

TheMinisterofTradeandIndustryhasalsopublishedvarioussector-specificcodesthatdetailthemannerinwhichB-BBEEmustbemeasuredforbusinessesoperatinginparticularsectors.Whereasector-specificcodehasbeenissued,businessesinthatsectorarerequiredtoapplytherelevantsectorcoderatherthantheCodesofGoodPractice(theCodes).ThegeneralCodesapplyonlywherethereisnosector-specificcodealthoughthegeneralCodesandthesector-specificcodesshouldgenerallyapplythesamebroadprinciples.Sectorcodeswerepublishedfor,amongothers,theforestry,construction,transport,andagriculturesectors.

Statutesthatspecificallyprovidefortheconsiderationofempowermentgoalsincludethe:

• MPRDAinrespectofmining,prospecting,explorationandproductionactivitieswhichrequiretheholdersofsuchrightstomeetstipulatedempowermentpercentages;and

• MarineLivingResourcesAct,andtheGeneralPolicyontheAllocationandManagementofFishingRights,2013,publishedthereunder,amongotherpolicies,whichprovidethat,inrespectofcommercialfishinglicenceallocationsandgrants,empowermentandtransformationgoalsbeconsidered(however,nobenchmarksinthisregardhavebeenpublished).

EvenintermsofNEMAasitiscurrentlydrafted,aswellastheSEMAs,anenvironmentalorotherauthorisationmaybeissuedsubjecttoconditionsimposedbytherelevant

authority.Therefore,inprinciple,iftheauthorityreasonablydeemsempowermentorlocalownershiprequirementsnecessarytobeincorporatedintoanenvironmentalauthorisationitispossiblethatempowermentorlocalownershiprequirementscouldbeimposed,butthismustalwaysbedonelawfully.Forexample,wateruselicencesissuedintermsoftheNationalWaterActareoccasionallymadesubjecttoconditionsrelatingtoobtainingormaintainingspecificB-BBEElevels.

8.Whatregulatoryrehabilitation/remediationprovisionsarethereinrelationtoanewandexistingdevelopmentoroperationanddotheserehabilitation/remediationobligationssurviveintheeventofasaleofbusiness?

Asidefromtheprovisionsspecificallyrelatingtoprospecting,mining,exploration,productionandrelatedactivities,whichwillbeaddressedindepthinaseparateBowmansguide,NEMAandtheNationalWaterActbothimposea‘dutyofcare’regardingthepreventionandremediationofpollutionandenvironmentaldegradation.ThepersonsuponwhomanobligationisplacedarestatedinNEMAtoincludeanowneroflandorpremises,apersonincontroloflandorpremises,orapersonwhohasarighttousethelandorpremises.

ASouthAfricanSupremeCourtofAppealjudgmentdealingwithdirectivesissuedintermsoftheNationalWaterActheldthatdirectivesissuedagainstanowneroflandandbusinesscanpersistevenafterthelandandbusinessaresoldandthatpriorownerhaslostitsconnectionwiththeland.Thismakesinclusionofappropriatecontractualmechanismsinasaleofbusinessagreementakeyissueinthehandlingofresponsibilitiesintermsofanydirectivesandinaddressingandallocatingthepotentiallong-termenvironmentalliabilitiesoftheparties.

Inaddition,NEMArequiresthatanapplicantforanenvironmentalauthorisation(inparticularrelatingtoprospecting,exploration,miningorproduction)mustcomplywiththeprescribedFinancialProvisioningRegulationsforenvironmentalrehabilitationinrespectof

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liabilityfordirectors,employeesandagentsinthecaseofso-calledNEMASchedule3offences.

NEMAprovidesfortheappointmentofenvironmentalmanagementinspectors,withnationalandprovincialenforcementdirectoratesinvariousgovernmentdepartments.

NEMA,alongwithmanyotherstatutes,empowersofficialstoissuecompliancenoticesanddirectivesrequiringtheholderofanyauthorisationtocomplywiththeconditionsthereof,orwithapplicablelegislation,ortoensurethatpollutionorenvironmentaldegradationisaddressed.Anyfailuretocomplywithdirectivesorcompliancenoticesusuallyconstitutesanoffenceintermsoflegislationandmaybefollowedbycriminalprosecutionand,afteradministrativeprocesshasbeenfollowed,thesuspensionorwithdrawaloftherelevantauthorisation.IfadirectivewhichhasbeenissuedunderNEMAortheNationalWaterActrelatingtopollutionorenvironmentaldegradationisnotcompliedwith,theenvironmentalauthoritymaytaketherequiredremedialstepsitselfandseektorecoverthecoststhereoffromtheresponsibleperson,aswellasawiderangeofotherpersons.

Virtuallyallenvironmentallegislationwhichrequirespermits,licencesorauthorisationsissubjecttoprovisionsprovidingfortheirwithdrawal,suspensionorcancellationforafailuretocomplywiththeconditionsimposed,orwiththeapplicablelegislation.

NEMAprovidesfortherecoveryoflossesordamagescausedbyanenvironmentalcrimefromtheconvictedperson,includingadirectorconvictedunderNEMA.Inparticular,anorganofstateorprivatepartythathasincurredcoststorehabilitatetheenvironmentcanclaimsuchcosts,lossesordamagesinthecriminaltrialwithouthavingtolodgeaseparatecivilclaimagainsttheconvictedperson.Thecourtmayalsoassessthefinancialadvantagethattheoffendergainedasaresultoftheenvironmentalcrimeandordertheconvictedpersontopaybackthefruitsofthecrimeasdamages,orcompensation,orafine.Furthermore,theconvictedpersonmayberequiredtopaythecostsoftheprosecutionofthecrime.

closureandongoingpost-decommissioningmanagementofnegativeenvironmentalimpacts.ItisalsoincreasinglycommonforenvironmentalauthorisationsissuedunderNEMAandwastemanagementlicencesissuedundertheWasteActtocontainconditionswhichimposedecommissioning,rehabilitationorongoingliabilityobligationsontheholderoftheauthorisationwithregardtotheauthoriseddevelopmentandrelatedactivities,bothduringtheconstructionperiodandattheendoflifeoftherelevantinfrastructureorfacility.

Therearealsoprovisionsinenvironmentallaws,suchasNEMAandtheNationalWaterAct,thatallowforsecuritytoberequiredbytheapplicantrelatingtoenvironmentaldamagecausedbytheauthorisedactivity.

TheNationalWaterAct,andWaterUseLicenceApplicationandAppealRegulationspublishedthereunder,providemechanismsenablingtherelevantauthorityto,ifnecessary,requiresecuritytobeputinplacepriortotheissuingofalicence.Similarly,NEMAmakesprovisionfortherelevantauthoritytopublishregulationsrequiringthepaymentorprovisionofsecurityinrelationtoenvironmentalauthorisations.FinancialProvisioningRegulationshavebeenpublishedthusfarinrespectofmining,prospecting,explorationandproductionactivities.

9.WhatarethetypesofenforcementmeasuresexercisedbytheenvironmentalauthoritiesinSouthAfrica;forexample,directives,suspensionordersorcompliancenotices,administrativepenalties,criminalprosecutionorrecoveryofremediationorcleanupcosts?

Mostenvironmentalstatutescontaincriminalsanctionsfornon-complianceandpenaltiesaretypicallypotentiallysignificant,usuallyincludingthepossibilityofimprisonmentforamaximumspecificperiod,impositionofafine,orbothsuchprisonsentenceandfine.PenaltiesunderNEMAandtheSEMAsareusuallyintherangeofamaximumofZAR5millionuptoamaximumofZAR10millionand/orimprisonmentforuptofiveor10years,dependingontheoffence.Thereisalsothepotentialforpersonalcriminal

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(admissionofguiltfinesarefinespaidforlessseriousenvironmentaloffencesintermsoftheCriminalProcedureAct,51of1977);

• therehasbeenasignificantincreaseinthenumberofcompliance-monitoringeventsinwhichfacilitieswereinspectedtoascertaincompliancewithrelevantlegislationandauthorisations;

• thenumberofpre-directivesissuedhasincreased(pre-directivesareissuedtoapersonsuchaswherethereisconfirmationanactivityiscausingpollutionordegradationoftheenvironment);

• thenumberoffinalcompliancenoticesissuedhasgenerallyincreasedinrecentyears;and

• thetotalamountofadministrativefinespaidforrectificationofactivitiesundertakenwithoutthenecessaryauthorisationintermsofNEMAamountedtoZAR10millionin2017/2018(asopposedtothepreviousyear’sZAR9.7million).Intermsofsection24GofNEMA,whenalistedactivityisundertakenwithoutpriorauthorisation,arectificationapplicationmustbemadetotheauthorities.Partofthisprocessincludesanadministrativefinebeingimposedontheapplicant,whichmaybeuptoZAR5million.

Theincreaseincompliance-monitoringinspectionsindicatespre-compliancenotices,aswellasultimatelycompliancenotices,shouldberegardedasthemoretypicalmechanismofadministrativeenforcementthatwouldbeencountered,alongwithpollution-relateddirectiveswhereappropriate,withprosecutionsbeinglesscommon.Thereisalsoincreasinglyactiveinvolvementofnon-governmentalorganisations,environmentalassociationsandinterestgroups,whichnotonlymonitorandreportontheenvironmentalperformanceofcompaniesoperatinginSouthAfrica,butwhicharewillingtolitigateonenvironmentalissues.ThisincludesarecentsuccessfulprivatecriminalprosecutioninaccordancewiththeprovisionsofNEMA.

10.Whichoftheenforcementmeasuresdotheauthoritiesgenerallytake?

TheSouthAfricanNationalEnvironmentalComplianceandEnforcementReports(NECERReports),whicharepreparedonanannualbasisbyDEFF,reflectenforcementandcompliancestatisticsacrossallprovincesandvarioussectors.TheNECERReportsindicatecompliancemonitoringinspectionsandadministrativesteps,suchastheissuingofpre-complianceandcompliancenotices,aswellasdirectives,aregenerallythemostcommoninitialenforcementmeasure(asidefromminoradmissionofguiltfinesformoretrivialoffences).

Therehasbeenageneraltrendofincreasesinthenumberofcompliance-monitoringinspectionsoffacilities,issuingofpre-compliancenotices,aswellascompliancenotices.

Thenumberofmatterswhichproceedtocriminalprosecutionandtrialissubstantiallylower,withtheenvironmentalauthoritiesandtheNationalProsecutingAuthoritybeingmoreselectiveastowhichnon-compliancemattersproceedtoprosecution.However,therehavebeensuccessfulprosecutionsonenvironmentalmattersinrecentyears.

11.ArethereanyevidentenforcementtrendsarisingfromcourtdecisionsinSouthAfrica?

OntheNECERReportsandthelimitedavailablecourtdecisions,statisticallytheredoesnotyetappeartobeaconsistentoruniformtrendtoenforcementovertheyears(thosejudgmentsthatareavailableareoftenaresultofpleaagreements).

However,thegeneralapproachbyauthoritiescanbeascertainedfromtheNECERReports,whichprovidesfeedbackonthetypesofenforcementstepstakenandprosecutionsthathaveproceeded.TheNECERReportssuggestenforcementefforts,generally,aretrendingupwards(albeitwithsomeyearonyearfluctuations):

• thenumberofcriminaldocketsregisteredhasgenerallytendedtoincreaseinrecentyears;

• therehasbeenanupwardtrendinthenumberofadmissionofguiltfinesissued

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hasbeenaggrievedbyanauthority’sdecisionhasarighttobegivenreasonsforthedecision.

13.Howlongdoesittypicallytakeforsuchremediestobepursuedtoaconclusion?

IntermsoftheappealregulationsunderNEMA,anappellantmustsubmithisorherappealwithinspecifiedtimeperiodsassetoutintheappealregulations.Theseregulationsalsocontainspecifictimeframesforrespondingstatementstoanappealtobesubmittedandbywhenadecisionontheappealmustbemade.Ifexpertadviceisrequiredbytheappealauthorityorifanindependentappealpanelisappointed,thetimeforprocessinganappealintermsoftheNEMAappealregulations,wouldbelonger.Typically,appealproceedingsunderNEMAshouldtakeaboutfourmonthstocomplete,butthismaybelongerdependingonthecomplexity.

AmorecomplexmechanismforappealsappliesundertheNationalWaterActand,dependingonthenatureoftheactivityforwhichawateruselicenceapplicationand/ortheadministrativedecisionwhichisthesubjectoftheappeal,anappealmayhavetobemadetotheMinisterofWaterandSanitationorotherwisetotheWaterTribunal,thelatterbeingapotentiallylengthyandcumbersomeprocess.

Followingtheappealproceedingssetoutabove,and(otherthaninexceptionalcircumstances)onlyoncetheinternalprocesshasbeenexhausted,ifaggrievedbythedecisionoftheappealauthority,apersonmaytakethedecisiononjudicialreview.

Thematterwillthenbeconsideredbythecourtanditisnotpossibletosayhowlongthejudicialreviewprocesswouldtaketofinalise.14.ArethereanyspecificlawswhichgovernclimatechangeinSouthAfrica?

InlinewithitsinternationalcommitmentsasamemberoftheUnitedNationsFrameworkConventiononClimateChange,SouthAfricahasrecentlyimplementedacarbontaxregimethroughtheCarbonTaxAct15of2019.TheCarbonTaxActprovidesforacarbontaxtobeleviedonthecarbondioxideequivalentofthesumofgreenhousegasemissionsofataxpayer.

12.Whatremediesdoesanapplicantforaconsent,authorisation,approval,licenceorpermitshaveiftheconsentisdelayedorrefused,ifitisissuedwithunfavourabletermsorconditions,orifitisrevoked?

SpecifictimingstipulationsareputinplaceinNEMAandthe2014EIARegulationsintermsofwhichanenvironmentalauthorisationapplicationprocessmustproceed,andwithinwhichperiodsadecisionmustbetakenonwhetherornottograntanapplication.Forexample,itisrequiredthattheauthoritymustgrantorrefusetheapplicationwithin107daysafterthereceiptbytheauthorityofanapplicant’sBARorscopingreportandEIA.

NEMAcontainsprovisionsthat,inthecontextofmining-relatedapplications,allowforadelayinthedecisiontobeescalated.Inextremecircumstancesofunreasonabledelay,theapplicantmayconsidertakingactionbywayofapplicationtotheHighCourtintermsofthePAJAtocompeltheauthoritytomakeadecision.

SouthAfricanenvironmentallegislationgenerallycontainsprovisionsallowingforappeals,includingbytheapplicantaswellasinterestedandaffectedparties,againstmanydecisions(suchasrelatingtograntingpermits,licencesandauthorisations)andspecificappealregulationshavebeenpromulgatedunderNEMA(whichalsoapplywithrespecttoappealsintermsofcertainoftheSEMAs,includingtheWasteAct,AirQualityAct,CoastalActandtheBiodiversityAct).IntermsofNEMA,anypersonmayappealadecisionoftheauthority.Duringthecourseofthisappealprocess,thedecisionwhichisthesubjectoftheappealgenerallyissuspendedpendingtheappealoutcome.

FollowingtheappealproceedingsintermsofNEMA,apersonaggrievedbyanenvironmentalauthority’sdecisionmay,wherejustified,seekajudicialreviewofthedecisionunderPAJAinacourtortribunal.However,suchareviewmaygenerallyonlybesoughtthroughthecourtsoncetheaggrievedpersonhasexhaustedallinternalremediesprovidedforintheenvironmentallegislationconcerned.Furthermore,intermsofPAJA,apersonwho

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butinsomeinstances,anentirelynewconsentapplicationmayberequiredbythebuyer:

• WasteAct–inrelationtoasaleofbusiness,theholderofthewastemanagementlicence,withthepermissionofthelicensingauthority,maytransferthelicencetothenewowner.

• NEMA–intermsofthe2014EIARegulations,itispossibletoapplyfortheamendmentoftheenvironmentalauthorisation,includingchangingthenameofthepersonwhoholdstheauthorisationintheeventofachangeofownershiportransferofrightsandobligations.

• AirQualityAct–ifownershipofanactivityforwhichanatmosphericemissionlicencehasbeenissuedistransferred,itispossibletotransferthelicencetothenewowneroftheactivity.Inordertoeffectsuchtransfer,itisnecessarytoapplytothelicensingauthority.

• NationalWaterAct–theholderofanentitlementtousewaterfromawaterresourceinrespectofanylandmaysurrenderthatentitlement,orpartthereof,inlieuofadifferentlicenceapplicationinrespectofotherlandandontheconditionthesubsequentapplicationisgranted.TheNationalWaterActalsoprovidesthatlicencesmaybeamendedtoreflectsuccessors-in-titleasanewlicenseefortheremainderofthetermofthelicence.

Inthecaseofasaleofshares,changeofcontrolprovisionsaresometimesincludedasconditionstoconsents;forexample,wastemanagementlicencesundertheWasteActfrequentlycontainauthoritynotificationrequirementsinthecaseofachangeofparticularsoftheultimateholdingcompanyofthelicenceholder.RightsandpermitsundertheMarineLivingResourcesActoftencontainconditionsregardingsaleofsharesandchangeofcontrol,potentiallyrequiringnotificationorapprovalincertaincircumstances.

Allconsentsrelevanttothetransactionwouldneedtobeindividuallyscrutinisedforanychangeincontrolimplications.

ThetaxisadministeredasanenvironmentallevyundertheCustomsandExciseAct91of1964,whichalsorequiresemissiongenerationfacilitiestoberegisteredorlicenced.TheemissiongeneratingactivitiesinrespectofwhichthetaxisleviedalignswiththeGreenhouseReportingRegulationsundertheAirQualityAct,intermsofwhichemissionsneedtobereportedinspecificinstances.

FurtherandmoreonerousregulatorycontrolsareanticipatedthroughthependingClimateChangeAct,whichamongstothers,isanticipatedtoimposemandatorycarbonbudgetsandcompliancewithgreenhousegasmitigationplans.

Inaddition,therehasrecentlybeenafocusontheextenttowhichclimatechangeimpactsneedtobeconsideredintheenvironmentalauthorisationprocessunderNEMA,aswellassocialpressureontheneedforlenderstodisclosetheclimatechangeimpacts/greenhousegasemissionsandclimatechangerelatedfinancialriskoftheprojectsinwhichtheyinvest.

TRANSACTIONAL CONSIDERATIONS

1.Arethereany‘changeofcontrol’ortransferofownershiprequirementswithrespecttoconsents,authorisations,approvals,licencesorpermits,suchaswhereasaleofbusinessorsharesisanticipated?

Intheeventofasaleofbusiness,theenvironmentalconsentsheldbythesellerwilltypicallyhavetobetransferred,inordertobeheldinthenameofthebuyer.Certainenvironmentallegislationstipulatesaspecificprocesstobefollowedtoeffectthetransferoftheconsentfromonepersontoanother(whichmayincludea‘fitandproperperson’qualificationcriterionsuchasundertheWasteActandAirQualityAct)

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2.Isitrequiredintermsofenvironmentallegislationforasellertodiscloseenvironmentalliabilitiesand/orcomplianceissuestoaprospectivepurchaserinthecontextofatransaction?

TheWasteActprescribesthatnopersonmaytransfercontaminatedlandwithoutinformingthepersontowhomthelandistobetransferredthatthelandiscontaminated.Inaddition,ifthelandhasbeendeclaredaremediationsiteintermsoftheWasteAct,theMinistermustbenotifiedofthetransactionandanyconditionsimposedbytheMinistermustbecompliedwith.

Therearenootherprovisionsintermsofenvironmentallegislationthatspecificallyrequirethedisclosureofenvironmentalliabilitiesorcomplianceissuestoaprospectivepurchaser.

However,itisrequiredintermsofthe2014EIARegulationsunderNEMA(andisanincreasinglycommonrequirementinconditionsofenvironmentalauthorisationsandlicences)thatholdersundertakeindependentcomplianceauditsfromtimetotime,andreporttheresultsoftheaudits,aswellasreportingroutinemonitoringresultsandpollutionincidents,totheenvironmentalauthorities.Theseauditandotherreportsprovideausefulpointofreferenceforaprospectivepurchaser.

PendingamendmentsproposedtoNEMAwillprovideforthepossibilityforasuccessor-in-titleorapersonincontroloflandtoundertakearectificationapplicationprocessforatransgressionrelatingtocommencingofalistedactivityunderNEMAbyapreceding/otherparty.Theimplicationofthisproposedamendmentisthattheapplicantwhopurchasesthebusinessandproceedswithrectification,maybeliableforanadministrativefineofuptoZAR5million(ormoreintermsofthependingNEMAamendments)byvirtueoftheownershipofthehistoricallyunlawfulbusinessand/orcontrolofthelandassociatedwiththetransgression.

Itisprudentforpurchaserstoundertakeappropriatedue-diligenceinvestigationsincircumstanceswheretherecouldbeenvironmentalcomplianceorpollution/contamination-relatedrisksandliabilitiesassociatedwithabusiness.

3.Cancontractualenvironmentalindemnitiesbetweenthepartiestothetransactionbeusedeffectivelytolimitexposureforenvironmentalliabilities?

Tovaryingdegreesanddependingonthefacts,contractualenvironmentalindemnitiesandundertakingsbetweenthepartiestothetransactioncanbeusedasaneffectivemechanismtolimit,butnotentirelyremove,exposuretoenvironmentalliabilitiesandrisks.Specialistlegaladviceisoftenrequiredtoensurethepotentialrisksandliabilitiesareidentifiedandthatcommerciallyappropriateandpracticaltermsareincludedinthetransactiondocuments.

Acompanymayalsotakeoutenvironmentalimpairmentliabilitypoliciesand/orDirectorsandOfficersLiabilityInsurancetoprotectitsdirectorsandofficersagainstthepaymentofanydamagesorfines.

Therearelimitationsastohowfarthisformofcontractualandinsuranceprotectioncango.Forexample,adirectorwhoisappointedfollowingthetransactioncouldfacepersonalcriminalliability,includingpossibleimprisonment,intheeventthatthereisongoingnon-complianceassociatedwiththebusinesswhichcannotbeimmediatelyremediedpost-transaction(suchaswherealicencetooperateakeyfacilityisoutstanding,orwhereconditionsofalicence,suchasrelatingtoemissionlimits,cannotbecompliedwithwithoutinvestingsignificantcapitalexpenditureandlongconstructionleadtimes).

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4.Canlenders,shareholders,directors,employees,agentsorotherpersonsbeliableforenvironmentaltransgressionsand/orpollutionandenvironmentaldegradation-relatedremediationcosts?

SouthAfricanstatutoryprovisionsregardingpossibleextendedliabilityfortransgressionsandpollutionorenvironmentaldegradationhavenotyetbeencomprehensivelytestedinthecourts,butabroadoverviewofsomeoftheprincipalareasofpotentiallender,shareholder,director,employeeandagentexposuretoenvironmentalliabilitiesissetoutbelow.Itwouldbeadvisableforspecificlegaladvicetobesoughtinatransactionalcontextwherethereareconcernsofmaterialenvironmentaltransgressionsorpollutionandenvironmentaldegradation-relatedliabilities,particularlyincircumstanceswhereenforcementactionhasalreadybeenthreatenedorcommenced.

NEMAallowsforpersonalcriminalliabilityofdirectors,employeesandagentsinthecaseofso-calledNEMASchedule3offences,withthemajorityofthemoresignificantenvironmentalcrimesthatfallunderarangeofenvironmentallegislationatanationalandprovinciallevelbeingincludedasSchedule3offences.

Inthecaseofdirectors,NEMAprovidesthatdirectorsatthetimeofcommissionoftheoffenceshallbeguiltyoftheoffence,wheretheoffenceresultedfromthedirector’sfailuretotakeallreasonablestepsnecessaryunderthecircumstancestopreventthecommissionoftheoffence.Thisissubjecttoafurtherprovisothatproofoftheoffencebythecompanyconstitutesprimafacieevidencethedirectorisguilty,creatinganevidentiaryburdenonthedirector.Inordertoescapeliability,adirectorwouldhavetoshowthatheorshetookallreasonablestepsunderthecircumstancestopreventthecommissionoftheoffence.

NEMAalsoprovidesfortherecoveryoflossesordamagescausedbyanenvironmentalcrimeandotherfinancialclaimsfromtheconvictedperson,includingadirectorconvictedunderNEMA.

Inthecaseofpotentialcriminalliabilityofshareholders,thereisnopresumptionorotherstatutoryenvironmentalliabilitydirectlyassociatedwithshareholding.Alloftheelementsofacrimewouldhavetobeestablishedforasuccessfulprosecutionandconvictionofashareholderforanyoftherelevantoffences,suchasstipulatedinNEMAandtheNationalWaterAct.

Regardingpollutionandenvironmentaldegradationliabilities,section24N(8)ofNEMAprovidesthat,notwithstandingtheSouthAfricanCompaniesAct,71of2008,thedirectorsofacompany“arejointlyandseverallyliableforanynegativeimpactontheenvironment,whetheradvertentlyorinadvertentlycausedbythecompanyorclosecorporationwhichtheyrepresent,includingdamage,degradationorpollution”.Thisprovision(whichwaspreviouslycontainedintheMPRDA)remainsuntestedintheSouthAfricancourts.

Section28ofNEMAandSection19oftheNationalWaterActbothseektomakeanypersonwhocanbesaidtohaveparticipatedinorbenefitedfromapollutingactivitypotentiallyliableforthepollution,includingthroughcost-recoverymechanismsthatapplyifremediationcostsareincurredbytheauthorities.Bothstatutesincludeprovisionswhichmakeapersonwhoisincontroloflandorpremisespotentiallyliableforpollutionorenvironmentaldegradation,orforpollutionofwaterresources.SouthAfricancourtshavenotconsideredwhatthetermincontrolmeansinthiscontextofpollutionorenvironmentaldegradationandwhetherthisextendstoparentcompanies.However,dependingonthefacts,ashareholdercouldpotentiallybeconsideredtobeincontroloflandorpremisesundercertaincircumstances.

BothNEMAandtheNationalWaterActalsoextendcost-recoveryliabilitytopersonsresponsiblefor,orwhodirectlyorindirectlycontributedto,thepollutionordegradationandpersonswhonegligently

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failedtopreventtheactivityorprocessbeingperformedorundertakenorthesituationoccuring.Additionally,ashareholdercouldpossiblybeliableunderthecost-recoveryprovisionsbasedonitsshareholdingbecauseNEMAandtheNationalWaterActprovidethatanypersonwhobenefitedfromremediationundertakenbytheauthoritiesmaybeliablefortheremediationcosts.Ourcourtshavealsonotyetconsideredtheseprovisions.

ThesameliabilityprinciplesunderNEMAandtheNationalWaterActcouldpotentiallyapplyinappropriatecircumstancestolenders,inparticularwherealenderhasahighdegreeofoversightovertheborrower’soperations.

Civilliabilityindelict(tort)fordamageandcleanupcostsmayapplytoaparentcompanyundercertaincircumstanceswherethereisdamagewrongfullycausedbyanintentionalornegligentacttoapersonorthepropertyofanother.

Incertaincircumstances,adirectorofaSouthAfricancompanycouldpotentiallybedelictuallyliablefordamagecausedtothirdpartiesbythecompany.

Thepossibilityofcommonlawactions,suchasdamagesclaimsindelict,arenottheonlycommonlawrisk,asinterdicts(injunctions)inrelationtoongoingenvironmentaltransgressionsandpollutingactivitiesmaybecommencedbyneighbours,environmentalinterestgroupsorbytheenvironmentalauthorities.

Theriskaroundcivilandcriminallitigationextendsbeyonddirectlyaffectedpersons,asenvironmentalinterestgroupscouldalsoestablishlegalstandingtoapproachthecourtsduetothebroadenedprovisionsrelatingtolegalstandingunderNEMA.Thereisincreasinglyactiveinvolvementofnon-governmentalorganisations,environmentalassociationsandinterestgroupsinlitigationonenvironmentalissues,includingarecentsuccessfulprivateprosecutionintermsofNEMA.

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Toviewprofilesofourlawyers,pleasevisitwww.bowmanslaw.com

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WANDISILEMANDLANA PartnerJohannesburg,SouthAfrica T:+27116699562E:[email protected]

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